Correlation Between Bank of America and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Bank of America and Old Westbury 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 Old Westbury 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 Old Westbury Short Term, you can compare the effects of market volatilities on Bank of America and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Old Westbury.
Diversification Opportunities for Bank of America and Old Westbury
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Old is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Old Westbury Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Short 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Short has no effect on the direction of Bank of America i.e., Bank of America and Old Westbury go up and down completely randomly.
Pair Corralation between Bank of America and Old Westbury
Considering the 90-day investment horizon Bank of America is expected to generate 13.27 times more return on investment than Old Westbury. However, Bank of America is 13.27 times more volatile than Old Westbury Short Term. It trades about 0.1 of its potential returns per unit of risk. Old Westbury Short Term is currently generating about 0.16 per unit of risk. If you would invest 2,754 in Bank of America on August 27, 2024 and sell it today you would earn a total of 1,946 from holding Bank of America or generate 70.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 50.13% |
| Values | Daily Returns |
Bank of America vs. Old Westbury Short Term
Performance |
| Timeline |
| Bank of America |
| Old Westbury Short |
Bank of America and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Old Westbury
The main advantage of trading using opposite Bank of America and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal | Bank of America vs. Bank of Nova |
| Old Westbury vs. Rational Special Situations | Old Westbury vs. Ab Value Fund | Old Westbury vs. Balanced Fund Investor | Old Westbury vs. Eic Value 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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