Correlation Between Bank of America and Blackrock National
Can any of the company-specific risk be diversified away by investing in both Bank of America and Blackrock National 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 Blackrock National 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 Blackrock National Municipal, you can compare the effects of market volatilities on Bank of America and Blackrock National 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 Blackrock National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Blackrock National.
Diversification Opportunities for Bank of America and Blackrock National
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Blackrock is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Blackrock National Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock National 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 Blackrock National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock National has no effect on the direction of Bank of America i.e., Bank of America and Blackrock National go up and down completely randomly.
Pair Corralation between Bank of America and Blackrock National
Considering the 90-day investment horizon Bank of America is expected to under-perform the Blackrock National. In addition to that, Bank of America is 5.47 times more volatile than Blackrock National Municipal. It trades about -0.36 of its total potential returns per unit of risk. Blackrock National Municipal is currently generating about 0.22 per unit of volatility. If you would invest 1,001 in Blackrock National Municipal on November 28, 2024 and sell it today you would earn a total of 8.00 from holding Blackrock National Municipal or generate 0.8% 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. Blackrock National Municipal
Performance |
| Timeline |
| Bank of America |
| Blackrock National |
Bank of America and Blackrock National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Blackrock National
The main advantage of trading using opposite Bank of America and Blackrock National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Blackrock National 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 Blackrock National will offset losses from the drop in Blackrock National'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 |
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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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