Correlation Between Bank of America and James Alpha
Can any of the company-specific risk be diversified away by investing in both Bank of America and James Alpha 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 James Alpha 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 James Alpha Managed, you can compare the effects of market volatilities on Bank of America and James Alpha 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 James Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and James Alpha.
Diversification Opportunities for Bank of America and James Alpha
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and James is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and James Alpha Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Alpha Managed 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 James Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Alpha Managed has no effect on the direction of Bank of America i.e., Bank of America and James Alpha go up and down completely randomly.
Pair Corralation between Bank of America and James Alpha
Considering the 90-day investment horizon Bank of America is expected to generate 3.76 times more return on investment than James Alpha. However, Bank of America is 3.76 times more volatile than James Alpha Managed. It trades about 0.25 of its potential returns per unit of risk. James Alpha Managed is currently generating about 0.13 per unit of risk. If you would invest 3,968 in Bank of America on August 30, 2024 and sell it today you would earn a total of 809.00 from holding Bank of America or generate 20.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. James Alpha Managed
Performance |
| Timeline |
| Bank of America |
| James Alpha Managed |
Bank of America and James Alpha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and James Alpha
The main advantage of trading using opposite Bank of America and James Alpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, James Alpha 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 James Alpha will offset losses from the drop in James Alpha's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings |
| James Alpha vs. Energy Services Fund | James Alpha vs. Hennessy Bp Energy | James Alpha vs. Guinness Atkinson Alternative | James Alpha vs. Victory Global Natural |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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