Correlation Between Bank of America and Federated Total
Can any of the company-specific risk be diversified away by investing in both Bank of America and Federated Total 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 Total 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 Total Return, you can compare the effects of market volatilities on Bank of America and Federated Total 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 Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Federated Total.
Diversification Opportunities for Bank of America and Federated Total
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Federated is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Federated Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Total Return 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 Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Total Return has no effect on the direction of Bank of America i.e., Bank of America and Federated Total go up and down completely randomly.
Pair Corralation between Bank of America and Federated Total
Considering the 90-day investment horizon Bank of America is expected to generate 6.16 times more return on investment than Federated Total. However, Bank of America is 6.16 times more volatile than Federated Total Return. It trades about 0.31 of its potential returns per unit of risk. Federated Total Return is currently generating about 0.09 per unit of risk. If you would invest 4,182 in Bank of America on September 1, 2024 and sell it today you would earn a total of 569.00 from holding Bank of America or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Federated Total Return
Performance |
| Timeline |
| Bank of America |
| Federated Total Return |
Bank of America and Federated Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Federated Total
The main advantage of trading using opposite Bank of America and Federated Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Federated Total 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 Total will offset losses from the drop in Federated Total'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 |
| Federated Total vs. Victory Rs Small | Federated Total vs. Rational Defensive Growth | Federated Total vs. Nationwide Growth Fund | Federated Total vs. Artisan Small Cap |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |