Correlation Between Bank of America and Lands End
Can any of the company-specific risk be diversified away by investing in both Bank of America and Lands End 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 Lands End 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 Lands End, you can compare the effects of market volatilities on Bank of America and Lands End 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 Lands End. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Lands End.
Diversification Opportunities for Bank of America and Lands End
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Lands is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Lands End in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lands End 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 Lands End. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lands End has no effect on the direction of Bank of America i.e., Bank of America and Lands End go up and down completely randomly.
Pair Corralation between Bank of America and Lands End
Considering the 90-day investment horizon Bank of America is expected to generate 1.78 times less return on investment than Lands End. But when comparing it to its historical volatility, Bank of America is 2.64 times less risky than Lands End. It trades about 0.06 of its potential returns per unit of risk. Lands End is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 805.00 in Lands End on November 9, 2024 and sell it today you would earn a total of 351.00 from holding Lands End or generate 43.6% 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. Lands End
Performance |
| Timeline |
| Bank of America |
| Lands End |
Bank of America and Lands End Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Lands End
The main advantage of trading using opposite Bank of America and Lands End positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Lands End 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 Lands End will offset losses from the drop in Lands End'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. Royal Bank of |
| Lands End vs. Tillys Inc | Lands End vs. Zumiez Inc | Lands End vs. Citi Trends | Lands End vs. Cato Corporation |
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 Stocks Directory module to find actively traded stocks across global markets.
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