Correlation Between Bank of America and Miller Market
Can any of the company-specific risk be diversified away by investing in both Bank of America and Miller Market 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 Miller Market 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 Miller Market Neutral, you can compare the effects of market volatilities on Bank of America and Miller Market 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 Miller Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Miller Market.
Diversification Opportunities for Bank of America and Miller Market
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Miller is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Miller Market Neutral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Market Neutral 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 Miller Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Market Neutral has no effect on the direction of Bank of America i.e., Bank of America and Miller Market go up and down completely randomly.
Pair Corralation between Bank of America and Miller Market
Considering the 90-day investment horizon Bank of America is expected to generate 15.08 times more return on investment than Miller Market. However, Bank of America is 15.08 times more volatile than Miller Market Neutral. It trades about 0.1 of its potential returns per unit of risk. Miller Market Neutral is currently generating about 0.42 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Miller Market Neutral
Performance |
| Timeline |
| Bank of America |
| Miller Market Neutral |
Bank of America and Miller Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Miller Market
The main advantage of trading using opposite Bank of America and Miller Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Miller Market 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 Miller Market will offset losses from the drop in Miller Market'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 |
| Miller Market vs. Miller Vertible Bond | Miller Market vs. Miller Vertible Bond | Miller Market vs. Miller Vertible Bond | Miller Market vs. Miller Intermediate Bond |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |