Correlation Between Bank of America and Fair Oaks
Can any of the company-specific risk be diversified away by investing in both Bank of America and Fair Oaks 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 Fair Oaks 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 Fair Oaks Income, you can compare the effects of market volatilities on Bank of America and Fair Oaks 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 Fair Oaks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Fair Oaks.
Diversification Opportunities for Bank of America and Fair Oaks
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Fair is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Fair Oaks Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Oaks Income 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 Fair Oaks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Oaks Income has no effect on the direction of Bank of America i.e., Bank of America and Fair Oaks go up and down completely randomly.
Pair Corralation between Bank of America and Fair Oaks
Considering the 90-day investment horizon Bank of America is expected to generate 1.34 times more return on investment than Fair Oaks. However, Bank of America is 1.34 times more volatile than Fair Oaks Income. It trades about 0.1 of its potential returns per unit of risk. Fair Oaks Income is currently generating about 0.08 per unit of risk. If you would invest 2,820 in Bank of America on August 31, 2024 and sell it today you would earn a total of 1,931 from holding Bank of America or generate 68.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.94% |
| Values | Daily Returns |
Bank of America vs. Fair Oaks Income
Performance |
| Timeline |
| Bank of America |
| Fair Oaks Income |
Bank of America and Fair Oaks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Fair Oaks
The main advantage of trading using opposite Bank of America and Fair Oaks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Fair Oaks 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 Fair Oaks will offset losses from the drop in Fair Oaks' long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| Fair Oaks vs. Samsung Electronics Co | Fair Oaks vs. Samsung Electronics Co | Fair Oaks vs. Hyundai Motor | Fair Oaks vs. Toyota Motor Corp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |