Correlation Between Bank of America and Federated Mid-cap
Can any of the company-specific risk be diversified away by investing in both Bank of America and Federated Mid-cap 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 Federated Mid-cap 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 Federated Mid Cap Index, you can compare the effects of market volatilities on Bank of America and Federated Mid-cap 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 Federated Mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Federated Mid-cap.
Diversification Opportunities for Bank of America and Federated Mid-cap
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and FEDERATED is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Federated Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mid Cap 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 Federated Mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mid Cap has no effect on the direction of Bank of America i.e., Bank of America and Federated Mid-cap go up and down completely randomly.
Pair Corralation between Bank of America and Federated Mid-cap
Considering the 90-day investment horizon Bank of America is expected to generate 1.45 times more return on investment than Federated Mid-cap. However, Bank of America is 1.45 times more volatile than Federated Mid Cap Index. It trades about 0.1 of its potential returns per unit of risk. Federated Mid Cap Index is currently generating about 0.11 per unit of risk. If you would invest 3,946 in Bank of America on September 3, 2024 and sell it today you would earn a total of 805.00 from holding Bank of America or generate 20.4% 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. Federated Mid Cap Index
Performance |
| Timeline |
| Bank of America |
| Federated Mid Cap |
Bank of America and Federated Mid-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Federated Mid-cap
The main advantage of trading using opposite Bank of America and Federated Mid-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Federated Mid-cap 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 Federated Mid-cap will offset losses from the drop in Federated Mid-cap's long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| Federated Mid-cap vs. Federated Max Cap Index | Federated Mid-cap vs. Federated Mdt Large | Federated Mid-cap vs. Federated Total Return | Federated Mid-cap vs. Dreyfus Smallcap Stock |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |