Correlation Between Bank of America and First IC
Can any of the company-specific risk be diversified away by investing in both Bank of America and First IC 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 First IC 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 First IC, you can compare the effects of market volatilities on Bank of America and First IC 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 First IC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and First IC.
Diversification Opportunities for Bank of America and First IC
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and First is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and First IC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First IC 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 First IC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First IC has no effect on the direction of Bank of America i.e., Bank of America and First IC go up and down completely randomly.
Pair Corralation between Bank of America and First IC
Considering the 90-day investment horizon Bank of America is expected to under-perform the First IC. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 1.32 times less risky than First IC. The stock trades about -0.03 of its potential returns per unit of risk. The First IC is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 890.00 in First IC on October 26, 2024 and sell it today you would earn a total of 140.00 from holding First IC or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Bank of America vs. First IC
Performance |
| Timeline |
| Bank of America |
| First IC |
Bank of America and First IC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and First IC
The main advantage of trading using opposite Bank of America and First IC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, First IC 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 First IC will offset losses from the drop in First IC's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC |
| First IC vs. CCFNB Bancorp | First IC vs. Glen Burnie Bancorp | First IC vs. Main Street Financial | First IC vs. Enterprise Financial Services |
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 CEOs Directory module to screen CEOs from public companies around the world.
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