Correlation Between Bank of America and IShares Evolved
Can any of the company-specific risk be diversified away by investing in both Bank of America and IShares Evolved 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 Evolved 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 Evolved Technology, you can compare the effects of market volatilities on Bank of America and IShares Evolved 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 Evolved. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and IShares Evolved.
Diversification Opportunities for Bank of America and IShares Evolved
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and IShares is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and iShares Evolved Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Evolved Tech 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 Evolved. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Evolved Tech has no effect on the direction of Bank of America i.e., Bank of America and IShares Evolved go up and down completely randomly.
Pair Corralation between Bank of America and IShares Evolved
Considering the 90-day investment horizon Bank of America is expected to generate 1.31 times more return on investment than IShares Evolved. However, Bank of America is 1.31 times more volatile than iShares Evolved Technology. It trades about 0.1 of its potential returns per unit of risk. iShares Evolved Technology is currently generating about 0.11 per unit of risk. If you would invest 2,824 in Bank of America on September 1, 2024 and sell it today you would earn a total of 1,927 from holding Bank of America or generate 68.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Bank of America vs. iShares Evolved Technology
Performance |
| Timeline |
| Bank of America |
| iShares Evolved Tech |
Bank of America and IShares Evolved Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and IShares Evolved
The main advantage of trading using opposite Bank of America and IShares Evolved positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, IShares Evolved 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 Evolved will offset losses from the drop in IShares Evolved's long position.| Bank of America vs. Citigroup | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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