Correlation Between Bank of America and Fibra UNO
Can any of the company-specific risk be diversified away by investing in both Bank of America and Fibra UNO 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 Fibra UNO 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 Fibra UNO, you can compare the effects of market volatilities on Bank of America and Fibra UNO 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 Fibra UNO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Fibra UNO.
Diversification Opportunities for Bank of America and Fibra UNO
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Fibra is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Fibra UNO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra UNO 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 Fibra UNO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra UNO has no effect on the direction of Bank of America i.e., Bank of America and Fibra UNO go up and down completely randomly.
Pair Corralation between Bank of America and Fibra UNO
Considering the 90-day investment horizon Bank of America is expected to generate 0.56 times more return on investment than Fibra UNO. However, Bank of America is 1.79 times less risky than Fibra UNO. It trades about 0.17 of its potential returns per unit of risk. Fibra UNO is currently generating about -0.05 per unit of risk. If you would invest 4,044 in Bank of America on August 31, 2024 and sell it today you would earn a total of 733.00 from holding Bank of America or generate 18.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Bank of America vs. Fibra UNO
Performance |
| Timeline |
| Bank of America |
| Fibra UNO |
Bank of America and Fibra UNO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Fibra UNO
The main advantage of trading using opposite Bank of America and Fibra UNO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Fibra UNO 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 Fibra UNO will offset losses from the drop in Fibra UNO's 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 |
| Fibra UNO vs. British Land | Fibra UNO vs. Global Net Lease, | Fibra UNO vs. VICI Properties | Fibra UNO vs. British Land |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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