Correlation Between Bank of America and Kentucky Tax-free
Can any of the company-specific risk be diversified away by investing in both Bank of America and Kentucky Tax-free 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 Kentucky Tax-free 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 Kentucky Tax Free Income, you can compare the effects of market volatilities on Bank of America and Kentucky Tax-free 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 Kentucky Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Kentucky Tax-free.
Diversification Opportunities for Bank of America and Kentucky Tax-free
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Kentucky is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Kentucky Tax Free Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentucky Tax Free 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 Kentucky Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentucky Tax Free has no effect on the direction of Bank of America i.e., Bank of America and Kentucky Tax-free go up and down completely randomly.
Pair Corralation between Bank of America and Kentucky Tax-free
Considering the 90-day investment horizon Bank of America is expected to generate 7.01 times more return on investment than Kentucky Tax-free. However, Bank of America is 7.01 times more volatile than Kentucky Tax Free Income. It trades about 0.31 of its potential returns per unit of risk. Kentucky Tax Free Income is currently generating about 0.23 per unit of risk. If you would invest 4,182 in Bank of America on September 1, 2024 and sell it today you would earn a total of 569.00 from holding Bank of America or generate 13.61% 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. Kentucky Tax Free Income
Performance |
| Timeline |
| Bank of America |
| Kentucky Tax Free |
Bank of America and Kentucky Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Kentucky Tax-free
The main advantage of trading using opposite Bank of America and Kentucky Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Kentucky Tax-free 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 Kentucky Tax-free will offset losses from the drop in Kentucky Tax-free's long position.| Bank of America vs. Citigroup | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings |
| Kentucky Tax-free vs. North Carolina Tax Free | Kentucky Tax-free vs. Kentucky Tax Free Short To Medium | Kentucky Tax-free vs. North Carolina Tax Free | Kentucky Tax-free vs. Intermediate Government Bond |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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