Correlation Between Bank of America and Voya Limited
Can any of the company-specific risk be diversified away by investing in both Bank of America and Voya Limited 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 Voya Limited 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 Voya Limited Maturity, you can compare the effects of market volatilities on Bank of America and Voya Limited 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 Voya Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Voya Limited.
Diversification Opportunities for Bank of America and Voya Limited
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Voya is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Voya Limited Maturity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Limited Maturity 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 Voya Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Limited Maturity has no effect on the direction of Bank of America i.e., Bank of America and Voya Limited go up and down completely randomly.
Pair Corralation between Bank of America and Voya Limited
Considering the 90-day investment horizon Bank of America is expected to generate 13.36 times more return on investment than Voya Limited. However, Bank of America is 13.36 times more volatile than Voya Limited Maturity. It trades about 0.24 of its potential returns per unit of risk. Voya Limited Maturity is currently generating about -0.13 per unit of risk. If you would invest 3,945 in Bank of America on August 25, 2024 and sell it today you would earn a total of 755.00 from holding Bank of America or generate 19.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Voya Limited Maturity
Performance |
| Timeline |
| Bank of America |
| Voya Limited Maturity |
Bank of America and Voya Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Voya Limited
The main advantage of trading using opposite Bank of America and Voya Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Voya Limited 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 Voya Limited will offset losses from the drop in Voya Limited's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Voya Limited vs. Voya Bond Index | Voya Limited vs. Voya Bond Index | Voya Limited vs. Voya Limited Maturity | Voya Limited vs. Voya Bond Index |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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