Correlation Between Bank of America and IShares
Can any of the company-specific risk be diversified away by investing in both Bank of America and IShares 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 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, you can compare the effects of market volatilities on Bank of America and IShares 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and IShares.
Diversification Opportunities for Bank of America and IShares
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and IShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of Bank of America i.e., Bank of America and IShares go up and down completely randomly.
Pair Corralation between Bank of America and IShares
If you would invest 3,290 in Bank of America on August 29, 2024 and sell it today you would earn a total of 1,496 from holding Bank of America or generate 45.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 0.48% |
| Values | Daily Returns |
Bank of America vs. IShares
Performance |
| Timeline |
| Bank of America |
| IShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and IShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and IShares
The main advantage of trading using opposite Bank of America and IShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, IShares 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 will offset losses from the drop in IShares' long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. JPMorgan Chase Co |
| IShares vs. iShares iBonds Dec | IShares vs. iShares iBonds Dec | IShares vs. iShares iBonds Dec | IShares vs. iShares iBonds Dec |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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