Correlation Between Bank of America and Federated Short-term
Can any of the company-specific risk be diversified away by investing in both Bank of America and Federated Short-term 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 Short-term 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 Short Term Income, you can compare the effects of market volatilities on Bank of America and Federated Short-term 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 Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Federated Short-term.
Diversification Opportunities for Bank of America and Federated Short-term
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Federated is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Federated Short Term Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short Term 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 Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Short Term has no effect on the direction of Bank of America i.e., Bank of America and Federated Short-term go up and down completely randomly.
Pair Corralation between Bank of America and Federated Short-term
Considering the 90-day investment horizon Bank of America is expected to generate 13.6 times more return on investment than Federated Short-term. However, Bank of America is 13.6 times more volatile than Federated Short Term Income. It trades about 0.27 of its potential returns per unit of risk. Federated Short Term Income is currently generating about 0.11 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Federated Short Term Income
Performance |
| Timeline |
| Bank of America |
| Federated Short Term |
Bank of America and Federated Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Federated Short-term
The main advantage of trading using opposite Bank of America and Federated Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Federated Short-term 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 Short-term will offset losses from the drop in Federated Short-term'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 |
| Federated Short-term vs. Vanguard Emerging Markets | Federated Short-term vs. Ab Select Longshort | Federated Short-term vs. Transamerica Emerging Markets | Federated Short-term vs. T Rowe Price |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |