Correlation Between Bank of America and Locorr Dynamic
Can any of the company-specific risk be diversified away by investing in both Bank of America and Locorr Dynamic 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 Locorr Dynamic 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 Locorr Dynamic Equity, you can compare the effects of market volatilities on Bank of America and Locorr Dynamic 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 Locorr Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Locorr Dynamic.
Diversification Opportunities for Bank of America and Locorr Dynamic
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Locorr is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Locorr Dynamic Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Dynamic Equity 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 Locorr Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Dynamic Equity has no effect on the direction of Bank of America i.e., Bank of America and Locorr Dynamic go up and down completely randomly.
Pair Corralation between Bank of America and Locorr Dynamic
Considering the 90-day investment horizon Bank of America is expected to generate 3.54 times more return on investment than Locorr Dynamic. However, Bank of America is 3.54 times more volatile than Locorr Dynamic Equity. It trades about 0.27 of its potential returns per unit of risk. Locorr Dynamic Equity is currently generating about 0.49 per unit of risk. If you would invest 4,262 in Bank of America on August 28, 2024 and sell it today you would earn a total of 513.00 from holding Bank of America or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Locorr Dynamic Equity
Performance |
| Timeline |
| Bank of America |
| Locorr Dynamic Equity |
Bank of America and Locorr Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Locorr Dynamic
The main advantage of trading using opposite Bank of America and Locorr Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Locorr Dynamic 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 Locorr Dynamic will offset losses from the drop in Locorr Dynamic's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Nova |
| Locorr Dynamic vs. Fidelity Advisor Diversified | Locorr Dynamic vs. Lord Abbett Diversified | Locorr Dynamic vs. Huber Capital Diversified | Locorr Dynamic vs. American Funds Conservative |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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