Correlation Between Bank of America and Heartland Mid
Can any of the company-specific risk be diversified away by investing in both Bank of America and Heartland Mid 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 Heartland Mid 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 Heartland Mid Cap, you can compare the effects of market volatilities on Bank of America and Heartland Mid 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 Heartland Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Heartland Mid.
Diversification Opportunities for Bank of America and Heartland Mid
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Heartland is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Heartland Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Mid Cap 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 Heartland Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Mid Cap has no effect on the direction of Bank of America i.e., Bank of America and Heartland Mid go up and down completely randomly.
Pair Corralation between Bank of America and Heartland Mid
Considering the 90-day investment horizon Bank of America is expected to generate 1.98 times more return on investment than Heartland Mid. However, Bank of America is 1.98 times more volatile than Heartland Mid Cap. It trades about 0.12 of its potential returns per unit of risk. Heartland Mid Cap is currently generating about 0.08 per unit of risk. If you would invest 3,495 in Bank of America on September 1, 2024 and sell it today you would earn a total of 1,256 from holding Bank of America or generate 35.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Bank of America vs. Heartland Mid Cap
Performance |
| Timeline |
| Bank of America |
| Heartland Mid Cap |
Bank of America and Heartland Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Heartland Mid
The main advantage of trading using opposite Bank of America and Heartland Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Heartland Mid 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 Heartland Mid will offset losses from the drop in Heartland Mid'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 |
| Heartland Mid vs. Heartland Value Fund | Heartland Mid vs. Heartland Value Plus | Heartland Mid vs. Jensen Quality Value | Heartland Mid vs. The Brown Capital |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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