Correlation Between Bank of America and Leslies
Can any of the company-specific risk be diversified away by investing in both Bank of America and Leslies 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 Leslies 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 Leslies, you can compare the effects of market volatilities on Bank of America and Leslies 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 Leslies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Leslies.
Diversification Opportunities for Bank of America and Leslies
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Leslies is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Leslies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leslies 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 Leslies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leslies has no effect on the direction of Bank of America i.e., Bank of America and Leslies go up and down completely randomly.
Pair Corralation between Bank of America and Leslies
Considering the 90-day investment horizon Bank of America is expected to generate 0.53 times more return on investment than Leslies. However, Bank of America is 1.87 times less risky than Leslies. It trades about 0.23 of its potential returns per unit of risk. Leslies is currently generating about -0.22 per unit of risk. If you would invest 4,429 in Bank of America on November 2, 2024 and sell it today you would earn a total of 246.00 from holding Bank of America or generate 5.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Leslies
Performance |
| Timeline |
| Bank of America |
| Leslies |
Bank of America and Leslies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Leslies
The main advantage of trading using opposite Bank of America and Leslies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Leslies 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 Leslies will offset losses from the drop in Leslies' long position.| Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Canadian Imperial Bank |
| Leslies vs. Sally Beauty Holdings | Leslies vs. ODP Corp | Leslies vs. 1 800 FLOWERSCOM | Leslies vs. Caseys General Stores |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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