Correlation Between Bank of America and Jacob Forward
Can any of the company-specific risk be diversified away by investing in both Bank of America and Jacob Forward 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 Jacob Forward 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 Jacob Forward ETF, you can compare the effects of market volatilities on Bank of America and Jacob Forward 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 Jacob Forward. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Jacob Forward.
Diversification Opportunities for Bank of America and Jacob Forward
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Jacob is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Jacob Forward ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob Forward ETF 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 Jacob Forward. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Forward ETF has no effect on the direction of Bank of America i.e., Bank of America and Jacob Forward go up and down completely randomly.
Pair Corralation between Bank of America and Jacob Forward
Considering the 90-day investment horizon Bank of America is expected to generate 1.33 times less return on investment than Jacob Forward. But when comparing it to its historical volatility, Bank of America is 1.11 times less risky than Jacob Forward. It trades about 0.27 of its potential returns per unit of risk. Jacob Forward ETF is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,077 in Jacob Forward ETF on August 30, 2024 and sell it today you would earn a total of 180.00 from holding Jacob Forward ETF or generate 16.71% 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. Jacob Forward ETF
Performance |
| Timeline |
| Bank of America |
| Jacob Forward ETF |
Bank of America and Jacob Forward Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Jacob Forward
The main advantage of trading using opposite Bank of America and Jacob Forward positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Jacob Forward 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 Jacob Forward will offset losses from the drop in Jacob Forward'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 |
| Jacob Forward vs. Amplify Thematic All Stars | Jacob Forward vs. Jacob Micro Cap | Jacob Forward vs. Main Thematic Innovation |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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