Correlation Between Bank of America and IRobot
Can any of the company-specific risk be diversified away by investing in both Bank of America and IRobot 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 IRobot 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 iRobot, you can compare the effects of market volatilities on Bank of America and IRobot 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 IRobot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and IRobot.
Diversification Opportunities for Bank of America and IRobot
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and IRobot is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and iRobot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iRobot 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 IRobot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iRobot has no effect on the direction of Bank of America i.e., Bank of America and IRobot go up and down completely randomly.
Pair Corralation between Bank of America and IRobot
Considering the 90-day investment horizon Bank of America is expected to generate 0.31 times more return on investment than IRobot. However, Bank of America is 3.26 times less risky than IRobot. It trades about 0.06 of its potential returns per unit of risk. iRobot is currently generating about -0.05 per unit of risk. If you would invest 3,113 in Bank of America on August 31, 2024 and sell it today you would earn a total of 1,664 from holding Bank of America or generate 53.45% 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. iRobot
Performance |
| Timeline |
| Bank of America |
| iRobot |
Bank of America and IRobot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and IRobot
The main advantage of trading using opposite Bank of America and IRobot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, IRobot 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 IRobot will offset losses from the drop in IRobot's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| IRobot vs. Tempur Sealy International | IRobot vs. La Z Boy Incorporated | IRobot vs. Purple Innovation | IRobot vs. MasterBrand |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |