Correlation Between Bank of America and Invesco Short
Can any of the company-specific risk be diversified away by investing in both Bank of America and Invesco Short 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 Short 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 Short Duration, you can compare the effects of market volatilities on Bank of America and Invesco Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Invesco Short.
Diversification Opportunities for Bank of America and Invesco Short
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Invesco is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Invesco Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Short Duration 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 Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Short Duration has no effect on the direction of Bank of America i.e., Bank of America and Invesco Short go up and down completely randomly.
Pair Corralation between Bank of America and Invesco Short
Considering the 90-day investment horizon Bank of America is expected to generate 3.34 times more return on investment than Invesco Short. However, Bank of America is 3.34 times more volatile than Invesco Short Duration. It trades about 0.06 of its potential returns per unit of risk. Invesco Short Duration is currently generating about 0.0 per unit of risk. If you would invest 3,085 in Bank of America on August 29, 2024 and sell it today you would earn a total of 1,692 from holding Bank of America or generate 54.85% 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. Invesco Short Duration
Performance |
| Timeline |
| Bank of America |
| Invesco Short Duration |
Bank of America and Invesco Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Invesco Short
The main advantage of trading using opposite Bank of America and Invesco Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Invesco Short 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 Short will offset losses from the drop in Invesco Short'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 |
| Invesco Short vs. iShares 5 10 Year | Invesco Short vs. iShares 0 5 Year | Invesco Short vs. SPDR Barclays Short | Invesco Short vs. iShares Core Total |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |