Correlation Between Bank of America and Growth Portfolio
Can any of the company-specific risk be diversified away by investing in both Bank of America and Growth Portfolio 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 Growth Portfolio 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 Growth Portfolio Class, you can compare the effects of market volatilities on Bank of America and Growth Portfolio 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 Growth Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Growth Portfolio.
Diversification Opportunities for Bank of America and Growth Portfolio
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Growth is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Growth Portfolio Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Portfolio Class 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 Growth Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Portfolio Class has no effect on the direction of Bank of America i.e., Bank of America and Growth Portfolio go up and down completely randomly.
Pair Corralation between Bank of America and Growth Portfolio
Considering the 90-day investment horizon Bank of America is expected to generate 1.48 times less return on investment than Growth Portfolio. But when comparing it to its historical volatility, Bank of America is 1.03 times less risky than Growth Portfolio. It trades about 0.26 of its potential returns per unit of risk. Growth Portfolio Class is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 3,936 in Growth Portfolio Class on August 30, 2024 and sell it today you would earn a total of 1,258 from holding Growth Portfolio Class or generate 31.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Growth Portfolio Class
Performance |
| Timeline |
| Bank of America |
| Growth Portfolio Class |
Bank of America and Growth Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Growth Portfolio
The main advantage of trading using opposite Bank of America and Growth Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Growth Portfolio 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 Growth Portfolio will offset losses from the drop in Growth Portfolio'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. JPMorgan Chase Co |
| Growth Portfolio vs. Growth Fund Of | Growth Portfolio vs. HUMANA INC | Growth Portfolio vs. Aquagold International | Growth Portfolio vs. Barloworld Ltd ADR |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |