Correlation Between Bank of America and Lifex Inflation-protec
Can any of the company-specific risk be diversified away by investing in both Bank of America and Lifex Inflation-protec 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 Inflation-protec 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 Inflation Protected Income, you can compare the effects of market volatilities on Bank of America and Lifex Inflation-protec 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 Inflation-protec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Lifex Inflation-protec.
Diversification Opportunities for Bank of America and Lifex Inflation-protec
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and Lifex is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Lifex Inflation Protected Inco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Inflation-protec 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 Inflation-protec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Inflation-protec has no effect on the direction of Bank of America i.e., Bank of America and Lifex Inflation-protec go up and down completely randomly.
Pair Corralation between Bank of America and Lifex Inflation-protec
Considering the 90-day investment horizon Bank of America is expected to generate 4.52 times more return on investment than Lifex Inflation-protec. However, Bank of America is 4.52 times more volatile than Lifex Inflation Protected Income. It trades about 0.1 of its potential returns per unit of risk. Lifex Inflation Protected Income is currently generating about 0.1 per unit of risk. If you would invest 3,938 in Bank of America on September 1, 2024 and sell it today you would earn a total of 813.00 from holding Bank of America or generate 20.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Bank of America vs. Lifex Inflation Protected Inco
Performance |
| Timeline |
| Bank of America |
| Lifex Inflation-protec |
Bank of America and Lifex Inflation-protec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Lifex Inflation-protec
The main advantage of trading using opposite Bank of America and Lifex Inflation-protec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Lifex Inflation-protec 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 Inflation-protec will offset losses from the drop in Lifex Inflation-protec's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Lifex Inflation-protec vs. Sprott Gold Equity | Lifex Inflation-protec vs. Global Gold Fund | Lifex Inflation-protec vs. Invesco Gold Special | Lifex Inflation-protec vs. Gamco Global Gold |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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