Correlation Between Bank of America and Polen Growth
Can any of the company-specific risk be diversified away by investing in both Bank of America and Polen Growth 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 Polen Growth 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 Polen Growth Fund, you can compare the effects of market volatilities on Bank of America and Polen Growth 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 Polen Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Polen Growth.
Diversification Opportunities for Bank of America and Polen Growth
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Polen is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Polen Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Growth 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 Polen Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen Growth has no effect on the direction of Bank of America i.e., Bank of America and Polen Growth go up and down completely randomly.
Pair Corralation between Bank of America and Polen Growth
Considering the 90-day investment horizon Bank of America is expected to generate 1.92 times more return on investment than Polen Growth. However, Bank of America is 1.92 times more volatile than Polen Growth Fund. It trades about 0.27 of its potential returns per unit of risk. Polen Growth Fund is currently generating about 0.25 per unit of risk. If you would invest 4,253 in Bank of America on August 30, 2024 and sell it today you would earn a total of 524.00 from holding Bank of America or generate 12.32% 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. Polen Growth Fund
Performance |
| Timeline |
| Bank of America |
| Polen Growth |
Bank of America and Polen Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Polen Growth
The main advantage of trading using opposite Bank of America and Polen Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Polen Growth 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 Polen Growth will offset losses from the drop in Polen Growth's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings |
| Polen Growth vs. Polen Growth Fund | Polen Growth vs. Edgewood Growth Fund | Polen Growth vs. Akre Focus Fund | Polen Growth vs. Brown Advisory Sustainable |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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