Correlation Between Bank of America and Franklin High
Can any of the company-specific risk be diversified away by investing in both Bank of America and Franklin High 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 High 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 High Yield, you can compare the effects of market volatilities on Bank of America and Franklin High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Franklin High.
Diversification Opportunities for Bank of America and Franklin High
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Franklin is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Franklin High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Yield 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 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Yield has no effect on the direction of Bank of America i.e., Bank of America and Franklin High go up and down completely randomly.
Pair Corralation between Bank of America and Franklin High
Considering the 90-day investment horizon Bank of America is expected to generate 5.23 times more return on investment than Franklin High. However, Bank of America is 5.23 times more volatile than Franklin High Yield. It trades about 0.11 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.1 per unit of risk. If you would invest 2,806 in Bank of America on August 28, 2024 and sell it today you would earn a total of 1,944 from holding Bank of America or generate 69.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Franklin High Yield
Performance |
| Timeline |
| Bank of America |
| Franklin High Yield |
Bank of America and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Franklin High
The main advantage of trading using opposite Bank of America and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Franklin High 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 High will offset losses from the drop in Franklin High's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Nova |
| Franklin High vs. Lgm Risk Managed | Franklin High vs. Franklin High Income | Franklin High vs. Artisan High Income | Franklin High vs. Goldman Sachs High |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |