Correlation Between Bank of America and Real Assets
Can any of the company-specific risk be diversified away by investing in both Bank of America and Real Assets 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 Real Assets 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 Real Assets Portfolio, you can compare the effects of market volatilities on Bank of America and Real Assets 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 Real Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Real Assets.
Diversification Opportunities for Bank of America and Real Assets
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and REAL is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Real Assets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Assets Portfolio 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 Real Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Assets Portfolio has no effect on the direction of Bank of America i.e., Bank of America and Real Assets go up and down completely randomly.
Pair Corralation between Bank of America and Real Assets
Considering the 90-day investment horizon Bank of America is expected to generate 3.02 times more return on investment than Real Assets. However, Bank of America is 3.02 times more volatile than Real Assets Portfolio. It trades about 0.06 of its potential returns per unit of risk. Real Assets Portfolio is currently generating about 0.02 per unit of risk. If you would invest 3,113 in Bank of America on September 2, 2024 and sell it today you would earn a total of 1,638 from holding Bank of America or generate 52.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Real Assets Portfolio
Performance |
| Timeline |
| Bank of America |
| Real Assets Portfolio |
Bank of America and Real Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Real Assets
The main advantage of trading using opposite Bank of America and Real Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Real Assets 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 Real Assets will offset losses from the drop in Real Assets' 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 |
| Real Assets vs. Gold And Precious | Real Assets vs. Gamco Global Gold | Real Assets vs. Oppenheimer Gold Special | Real Assets vs. Gabelli Gold Fund |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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