Correlation Between Bank of America and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both Bank of America and Grocery Outlet 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 Grocery Outlet 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 Grocery Outlet Holding, you can compare the effects of market volatilities on Bank of America and Grocery Outlet 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 Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Grocery Outlet.
Diversification Opportunities for Bank of America and Grocery Outlet
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Grocery is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding 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 Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Bank of America i.e., Bank of America and Grocery Outlet go up and down completely randomly.
Pair Corralation between Bank of America and Grocery Outlet
Considering the 90-day investment horizon Bank of America is expected to generate 1.21 times less return on investment than Grocery Outlet. But when comparing it to its historical volatility, Bank of America is 2.38 times less risky than Grocery Outlet. It trades about 0.24 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,628 in Grocery Outlet Holding on August 25, 2024 and sell it today you would earn a total of 326.00 from holding Grocery Outlet Holding or generate 20.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Grocery Outlet Holding
Performance |
| Timeline |
| Bank of America |
| Grocery Outlet Holding |
Bank of America and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Grocery Outlet
The main advantage of trading using opposite Bank of America and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Grocery Outlet 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 Grocery Outlet will offset losses from the drop in Grocery Outlet's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Grocery Outlet vs. Hf Foods Group | Grocery Outlet vs. Innovative Food Hldg | Grocery Outlet vs. Calavo Growers | Grocery Outlet vs. The Chefs Warehouse |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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