Correlation Between Bank of America and Hartford Short
Can any of the company-specific risk be diversified away by investing in both Bank of America and Hartford Short 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 Hartford Short 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 Hartford Short Duration, you can compare the effects of market volatilities on Bank of America and Hartford Short 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 Hartford Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Hartford Short.
Diversification Opportunities for Bank of America and Hartford Short
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Hartford is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Hartford Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Short Duration 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 Hartford Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Short Duration has no effect on the direction of Bank of America i.e., Bank of America and Hartford Short go up and down completely randomly.
Pair Corralation between Bank of America and Hartford Short
Considering the 90-day investment horizon Bank of America is expected to generate 14.56 times more return on investment than Hartford Short. However, Bank of America is 14.56 times more volatile than Hartford Short Duration. It trades about 0.27 of its potential returns per unit of risk. Hartford Short Duration is currently generating about 0.05 per unit of risk. If you would invest 4,253 in Bank of America on August 30, 2024 and sell it today you would earn a total of 524.00 from holding Bank of America or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Hartford Short Duration
Performance |
| Timeline |
| Bank of America |
| Hartford Short Duration |
Bank of America and Hartford Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Hartford Short
The main advantage of trading using opposite Bank of America and Hartford Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Hartford Short 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 Hartford Short will offset losses from the drop in Hartford Short's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings |
| Hartford Short vs. Hartford Total Return | Hartford Short vs. iShares Edge Investment | Hartford Short vs. Hartford Schroders Tax Aware | Hartford Short vs. ClearShares Ultra Short Maturity |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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