Correlation Between Bank of America and Fidelity Short
Can any of the company-specific risk be diversified away by investing in both Bank of America and Fidelity Short 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 Fidelity Short 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 Fidelity Short Duration, you can compare the effects of market volatilities on Bank of America and Fidelity Short 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 Fidelity Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Fidelity Short.
Diversification Opportunities for Bank of America and Fidelity Short
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Fidelity is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Fidelity Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Short Duration 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 Fidelity Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Short Duration has no effect on the direction of Bank of America i.e., Bank of America and Fidelity Short go up and down completely randomly.
Pair Corralation between Bank of America and Fidelity Short
Considering the 90-day investment horizon Bank of America is expected to generate 18.02 times more return on investment than Fidelity Short. However, Bank of America is 18.02 times more volatile than Fidelity Short Duration. It trades about 0.27 of its potential returns per unit of risk. Fidelity Short Duration is currently generating about 0.36 per unit of risk. If you would invest 4,253 in Bank of America on August 30, 2024 and sell it today you would earn a total of 524.00 from holding Bank of America or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Fidelity Short Duration
Performance |
| Timeline |
| Bank of America |
| Fidelity Short Duration |
Bank of America and Fidelity Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Fidelity Short
The main advantage of trading using opposite Bank of America and Fidelity Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Fidelity Short 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 Fidelity Short will offset losses from the drop in Fidelity Short'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 |
| Fidelity Short vs. Fidelity Advisor Limited | Fidelity Short vs. Fidelity Global Bond | Fidelity Short vs. Fidelity Focused High | Fidelity Short vs. Fidelity Global Equity |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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