Correlation Between Bank of America and Pimco International
Can any of the company-specific risk be diversified away by investing in both Bank of America and Pimco International 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 Pimco International 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 Pimco International Stocksplus, you can compare the effects of market volatilities on Bank of America and Pimco International 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 Pimco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Pimco International.
Diversification Opportunities for Bank of America and Pimco International
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Pimco is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Pimco International Stocksplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco International 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 Pimco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco International has no effect on the direction of Bank of America i.e., Bank of America and Pimco International go up and down completely randomly.
Pair Corralation between Bank of America and Pimco International
Considering the 90-day investment horizon Bank of America is expected to generate 3.21 times more return on investment than Pimco International. However, Bank of America is 3.21 times more volatile than Pimco International Stocksplus. It trades about 0.27 of its potential returns per unit of risk. Pimco International Stocksplus is currently generating about -0.07 per unit of risk. If you would invest 4,262 in Bank of America on August 29, 2024 and sell it today you would earn a total of 523.50 from holding Bank of America or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Pimco International Stocksplus
Performance |
| Timeline |
| Bank of America |
| Pimco International |
Bank of America and Pimco International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Pimco International
The main advantage of trading using opposite Bank of America and Pimco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Pimco International 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 Pimco International will offset losses from the drop in Pimco International'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 |
| Pimco International vs. Pimco Small Cap | Pimco International vs. Fundamental Indexplus Tr | Pimco International vs. Stocksplus Total Return | Pimco International vs. Allianzgi Nfj Mid Cap |
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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