Correlation Between Bank of America and Franklin Missouri
Can any of the company-specific risk be diversified away by investing in both Bank of America and Franklin Missouri 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 Missouri 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 Missouri Tax Free, you can compare the effects of market volatilities on Bank of America and Franklin Missouri 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 Missouri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Franklin Missouri.
Diversification Opportunities for Bank of America and Franklin Missouri
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Franklin is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Franklin Missouri Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Missouri Tax 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 Missouri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Missouri Tax has no effect on the direction of Bank of America i.e., Bank of America and Franklin Missouri go up and down completely randomly.
Pair Corralation between Bank of America and Franklin Missouri
Considering the 90-day investment horizon Bank of America is expected to under-perform the Franklin Missouri. In addition to that, Bank of America is 4.35 times more volatile than Franklin Missouri Tax Free. It trades about -0.09 of its total potential returns per unit of risk. Franklin Missouri Tax Free is currently generating about -0.02 per unit of volatility. If you would invest 1,048 in Franklin Missouri Tax Free on November 27, 2024 and sell it today you would lose (3.00) from holding Franklin Missouri Tax Free or give up 0.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Franklin Missouri Tax Free
Performance |
| Timeline |
| Bank of America |
| Franklin Missouri Tax |
Bank of America and Franklin Missouri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Franklin Missouri
The main advantage of trading using opposite Bank of America and Franklin Missouri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Franklin Missouri 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 Missouri will offset losses from the drop in Franklin Missouri's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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