Correlation Between Bank of America and Invesco International
Can any of the company-specific risk be diversified away by investing in both Bank of America and Invesco International 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 Invesco International 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 Invesco International E, you can compare the effects of market volatilities on Bank of America and Invesco International 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 Invesco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Invesco International.
Diversification Opportunities for Bank of America and Invesco International
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Invesco is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Invesco International E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco International 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 Invesco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco International has no effect on the direction of Bank of America i.e., Bank of America and Invesco International go up and down completely randomly.
Pair Corralation between Bank of America and Invesco International
Considering the 90-day investment horizon Bank of America is expected to generate 1.23 times less return on investment than Invesco International. In addition to that, Bank of America is 1.83 times more volatile than Invesco International E. It trades about 0.05 of its total potential returns per unit of risk. Invesco International E is currently generating about 0.12 per unit of volatility. If you would invest 1,052 in Invesco International E on August 24, 2024 and sell it today you would earn a total of 108.00 from holding Invesco International E or generate 10.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 19.56% |
| Values | Daily Returns |
Bank of America vs. Invesco International E
Performance |
| Timeline |
| Bank of America |
| Invesco International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and Invesco International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Invesco International
The main advantage of trading using opposite Bank of America and Invesco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Invesco International 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 Invesco International will offset losses from the drop in Invesco International's long position.| Bank of America vs. Amtech Systems | Bank of America vs. Gold Fields Ltd | Bank of America vs. Aegean Airlines SA | Bank of America vs. Merck Company |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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