Correlation Between Bank of America and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Bank of America and IShares ESG 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 IShares ESG 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 iShares ESG Balanced, you can compare the effects of market volatilities on Bank of America and IShares ESG 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 IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and IShares ESG.
Diversification Opportunities for Bank of America and IShares ESG
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and IShares is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and iShares ESG Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Balanced 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 IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Balanced has no effect on the direction of Bank of America i.e., Bank of America and IShares ESG go up and down completely randomly.
Pair Corralation between Bank of America and IShares ESG
Considering the 90-day investment horizon Bank of America is expected to under-perform the IShares ESG. In addition to that, Bank of America is 1.38 times more volatile than iShares ESG Balanced. It trades about -0.31 of its total potential returns per unit of risk. iShares ESG Balanced is currently generating about 0.05 per unit of volatility. If you would invest 5,209 in iShares ESG Balanced on November 27, 2024 and sell it today you would earn a total of 29.00 from holding iShares ESG Balanced or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. iShares ESG Balanced
Performance |
| Timeline |
| Bank of America |
| iShares ESG Balanced |
Bank of America and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and IShares ESG
The main advantage of trading using opposite Bank of America and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, IShares ESG 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 IShares ESG will offset losses from the drop in IShares ESG'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 |
| IShares ESG vs. iShares ESG Growth | IShares ESG vs. iShares ESG Equity | IShares ESG vs. iShares ESG Conservative | IShares ESG vs. BMO Balanced ESG |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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