Correlation Between Bank of America and Franklin Small
Can any of the company-specific risk be diversified away by investing in both Bank of America and Franklin Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on Bank of America and Franklin Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Franklin Small.
Diversification Opportunities for Bank of America and Franklin Small
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Franklin is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Franklin Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Small 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 Franklin Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Small Cap has no effect on the direction of Bank of America i.e., Bank of America and Franklin Small go up and down completely randomly.
Pair Corralation between Bank of America and Franklin Small
Considering the 90-day investment horizon Bank of America is expected to generate 1.14 times more return on investment than Franklin Small. However, Bank of America is 1.14 times more volatile than Franklin Small Cap. It trades about 0.27 of its potential returns per unit of risk. Franklin Small Cap is currently generating about 0.2 per unit of risk. If you would invest 4,262 in Bank of America on August 29, 2024 and sell it today you would earn a total of 523.50 from holding Bank of America or generate 12.28% 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. Franklin Small Cap
Performance |
| Timeline |
| Bank of America |
| Franklin Small Cap |
Bank of America and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Franklin Small
The main advantage of trading using opposite Bank of America and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Franklin Small 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 Small will offset losses from the drop in Franklin Small'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. JPMorgan Chase Co |
| Franklin Small vs. Franklin Rising Dividends | Franklin Small vs. Franklin Mutual Global | Franklin Small vs. Franklin Mutual Shares | Franklin Small vs. Franklin Growth Fund |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |