Correlation Between Bank of America and Franklin Bitcoin
Can any of the company-specific risk be diversified away by investing in both Bank of America and Franklin Bitcoin at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bank of America and Franklin Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Franklin Bitcoin ETF, you can compare the effects of market volatilities on Bank of America and Franklin Bitcoin and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bank of America with a short position of Franklin Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Franklin Bitcoin.
Diversification Opportunities for Bank of America and Franklin Bitcoin
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Franklin is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Franklin Bitcoin ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Bitcoin ETF and Bank of America is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bank of America are associated (or correlated) with Franklin Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Bitcoin ETF has no effect on the direction of Bank of America i.e., Bank of America and Franklin Bitcoin go up and down completely randomly.
Pair Corralation between Bank of America and Franklin Bitcoin
Considering the 90-day investment horizon Bank of America is expected to generate 2.65 times less return on investment than Franklin Bitcoin. But when comparing it to its historical volatility, Bank of America is 2.14 times less risky than Franklin Bitcoin. It trades about 0.31 of its potential returns per unit of risk. Franklin Bitcoin ETF is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 4,052 in Franklin Bitcoin ETF on September 1, 2024 and sell it today you would earn a total of 1,580 from holding Franklin Bitcoin ETF or generate 38.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Franklin Bitcoin ETF
Performance |
| Timeline |
| Bank of America |
| Franklin Bitcoin ETF |
Bank of America and Franklin Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Franklin Bitcoin
The main advantage of trading using opposite Bank of America and Franklin Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Franklin Bitcoin can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Franklin Bitcoin will offset losses from the drop in Franklin Bitcoin's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Franklin Bitcoin vs. ProShares Trust | Franklin Bitcoin vs. iShares Ethereum Trust | Franklin Bitcoin vs. ProShares Trust | Franklin Bitcoin vs. Grayscale Ethereum Trust |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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