Correlation Between Bank of America and Lifex Income
Can any of the company-specific risk be diversified away by investing in both Bank of America and Lifex Income 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 Lifex Income 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 Lifex Income, you can compare the effects of market volatilities on Bank of America and Lifex Income 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 Lifex Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Lifex Income.
Diversification Opportunities for Bank of America and Lifex Income
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Lifex is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Lifex Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Income 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 Lifex Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Income has no effect on the direction of Bank of America i.e., Bank of America and Lifex Income go up and down completely randomly.
Pair Corralation between Bank of America and Lifex Income
If you would invest 4,253 in Bank of America on August 30, 2024 and sell it today you would earn a total of 524.00 from holding Bank of America or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Lifex Income
Performance |
| Timeline |
| Bank of America |
| Lifex Income |
Bank of America and Lifex Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Lifex Income
The main advantage of trading using opposite Bank of America and Lifex Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Lifex Income 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 Lifex Income will offset losses from the drop in Lifex Income'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 |
| Lifex Income vs. Jhancock Real Estate | Lifex Income vs. Virtus Real Estate | Lifex Income vs. Morgan Stanley Institutional | Lifex Income vs. Pender Real Estate |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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