Correlation Between Bank of America and Sprott Focus
Can any of the company-specific risk be diversified away by investing in both Bank of America and Sprott Focus 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 Sprott Focus 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 Sprott Focus Trust, you can compare the effects of market volatilities on Bank of America and Sprott Focus 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 Sprott Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Sprott Focus.
Diversification Opportunities for Bank of America and Sprott Focus
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Sprott is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Sprott Focus Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Focus Trust 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 Sprott Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Focus Trust has no effect on the direction of Bank of America i.e., Bank of America and Sprott Focus go up and down completely randomly.
Pair Corralation between Bank of America and Sprott Focus
Considering the 90-day investment horizon Bank of America is expected to generate 1.68 times less return on investment than Sprott Focus. In addition to that, Bank of America is 1.3 times more volatile than Sprott Focus Trust. It trades about 0.07 of its total potential returns per unit of risk. Sprott Focus Trust is currently generating about 0.16 per unit of volatility. If you would invest 798.00 in Sprott Focus Trust on September 13, 2024 and sell it today you would earn a total of 18.00 from holding Sprott Focus Trust or generate 2.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Sprott Focus Trust
Performance |
| Timeline |
| Bank of America |
| Sprott Focus Trust |
Bank of America and Sprott Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Sprott Focus
The main advantage of trading using opposite Bank of America and Sprott Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Sprott Focus 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 Sprott Focus will offset losses from the drop in Sprott Focus' long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Canadian Imperial Bank |
| Sprott Focus vs. MFS Investment Grade | Sprott Focus vs. Eaton Vance National | Sprott Focus vs. Nuveen California Select | Sprott Focus vs. Federated Premier Municipal |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |