Correlation Between Bank of America and IQ 500
Can any of the company-specific risk be diversified away by investing in both Bank of America and IQ 500 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 IQ 500 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 IQ 500 International, you can compare the effects of market volatilities on Bank of America and IQ 500 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 IQ 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and IQ 500.
Diversification Opportunities for Bank of America and IQ 500
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and IQIN is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and IQ 500 International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ 500 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 IQ 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ 500 International has no effect on the direction of Bank of America i.e., Bank of America and IQ 500 go up and down completely randomly.
Pair Corralation between Bank of America and IQ 500
Considering the 90-day investment horizon Bank of America is expected to generate 1.9 times more return on investment than IQ 500. However, Bank of America is 1.9 times more volatile than IQ 500 International. It trades about 0.06 of its potential returns per unit of risk. IQ 500 International is currently generating about 0.05 per unit of risk. If you would invest 3,079 in Bank of America on August 30, 2024 and sell it today you would earn a total of 1,698 from holding Bank of America or generate 55.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Bank of America vs. IQ 500 International
Performance |
| Timeline |
| Bank of America |
| IQ 500 International |
Bank of America and IQ 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and IQ 500
The main advantage of trading using opposite Bank of America and IQ 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, IQ 500 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 IQ 500 will offset losses from the drop in IQ 500's 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 |
| IQ 500 vs. IQ 50 Percent | IQ 500 vs. FlexShares International Quality | IQ 500 vs. Invesco SP International | IQ 500 vs. American Century Quality |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |