Correlation Between Bank of America and Nuveen Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Bank of America and Nuveen Pennsylvania 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 Nuveen Pennsylvania 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 Nuveen Pennsylvania Quality, you can compare the effects of market volatilities on Bank of America and Nuveen Pennsylvania 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 Nuveen Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Nuveen Pennsylvania.
Diversification Opportunities for Bank of America and Nuveen Pennsylvania
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Nuveen is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Nuveen Pennsylvania Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Pennsylvania 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 Nuveen Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Pennsylvania has no effect on the direction of Bank of America i.e., Bank of America and Nuveen Pennsylvania go up and down completely randomly.
Pair Corralation between Bank of America and Nuveen Pennsylvania
Considering the 90-day investment horizon Bank of America is expected to generate 3.07 times more return on investment than Nuveen Pennsylvania. However, Bank of America is 3.07 times more volatile than Nuveen Pennsylvania Quality. It trades about 0.1 of its potential returns per unit of risk. Nuveen Pennsylvania Quality is currently generating about 0.05 per unit of risk. If you would invest 3,877 in Bank of America on September 12, 2024 and sell it today you would earn a total of 729.00 from holding Bank of America or generate 18.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Nuveen Pennsylvania Quality
Performance |
| Timeline |
| Bank of America |
| Nuveen Pennsylvania |
Bank of America and Nuveen Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Nuveen Pennsylvania
The main advantage of trading using opposite Bank of America and Nuveen Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Nuveen Pennsylvania 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 Nuveen Pennsylvania will offset losses from the drop in Nuveen Pennsylvania's long position.| Bank of America vs. JPMorgan Chase Co | Bank of America vs. Victory Integrity Smallmid Cap | Bank of America vs. Hilton Worldwide Holdings | Bank of America vs. NVIDIA |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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