Correlation Between Bank of America and Franklin Connecticut
Can any of the company-specific risk be diversified away by investing in both Bank of America and Franklin Connecticut 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 Connecticut 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 Necticut Tax Free, you can compare the effects of market volatilities on Bank of America and Franklin Connecticut 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 Connecticut. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Franklin Connecticut.
Diversification Opportunities for Bank of America and Franklin Connecticut
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Franklin is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Franklin Necticut Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Necticut 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 Connecticut. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Necticut Tax has no effect on the direction of Bank of America i.e., Bank of America and Franklin Connecticut go up and down completely randomly.
Pair Corralation between Bank of America and Franklin Connecticut
Considering the 90-day investment horizon Bank of America is expected to generate 5.91 times more return on investment than Franklin Connecticut. However, Bank of America is 5.91 times more volatile than Franklin Necticut Tax Free. It trades about 0.1 of its potential returns per unit of risk. Franklin Necticut Tax Free is currently generating about 0.13 per unit of risk. If you would invest 3,938 in Bank of America on September 1, 2024 and sell it today you would earn a total of 813.00 from holding Bank of America or generate 20.64% 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 Necticut Tax Free
Performance |
| Timeline |
| Bank of America |
| Franklin Necticut Tax |
Bank of America and Franklin Connecticut Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Franklin Connecticut
The main advantage of trading using opposite Bank of America and Franklin Connecticut positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Franklin Connecticut 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 Connecticut will offset losses from the drop in Franklin Connecticut's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Franklin Connecticut vs. Franklin Mutual Beacon | Franklin Connecticut vs. Templeton Developing Markets | Franklin Connecticut vs. Franklin Mutual Global | Franklin Connecticut vs. Franklin Mutual Global |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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