Correlation Between Bank of America and SPDR Nuveen
Can any of the company-specific risk be diversified away by investing in both Bank of America and SPDR Nuveen 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 SPDR Nuveen 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 SPDR Nuveen Municipal, you can compare the effects of market volatilities on Bank of America and SPDR Nuveen 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 SPDR Nuveen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and SPDR Nuveen.
Diversification Opportunities for Bank of America and SPDR Nuveen
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and SPDR is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and SPDR Nuveen Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Nuveen Municipal 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 SPDR Nuveen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Nuveen Municipal has no effect on the direction of Bank of America i.e., Bank of America and SPDR Nuveen go up and down completely randomly.
Pair Corralation between Bank of America and SPDR Nuveen
Considering the 90-day investment horizon Bank of America is expected to generate 6.21 times more return on investment than SPDR Nuveen. However, Bank of America is 6.21 times more volatile than SPDR Nuveen Municipal. It trades about 0.19 of its potential returns per unit of risk. SPDR Nuveen Municipal is currently generating about -0.05 per unit of risk. If you would invest 4,438 in Bank of America on October 25, 2024 and sell it today you would earn a total of 201.00 from holding Bank of America or generate 4.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. SPDR Nuveen Municipal
Performance |
| Timeline |
| Bank of America |
| SPDR Nuveen Municipal |
Bank of America and SPDR Nuveen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and SPDR Nuveen
The main advantage of trading using opposite Bank of America and SPDR Nuveen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, SPDR Nuveen 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 SPDR Nuveen will offset losses from the drop in SPDR Nuveen's long position.| Bank of America vs. JPMorgan Chase Co | Bank of America vs. Bank of America | Bank of America vs. RLJ Lodging Trust | Bank of America vs. PennyMac Finl Svcs |
| SPDR Nuveen vs. Mountain Commerce Bancorp | SPDR Nuveen vs. Magyar Bancorp | SPDR Nuveen vs. Nortech Systems Incorporated | SPDR Nuveen vs. Aquagold International |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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