Correlation Between Bank of America and Aqr Global
Can any of the company-specific risk be diversified away by investing in both Bank of America and Aqr Global 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 Aqr Global 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 Aqr Global Macro, you can compare the effects of market volatilities on Bank of America and Aqr Global 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 Aqr Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Aqr Global.
Diversification Opportunities for Bank of America and Aqr Global
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Aqr is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Aqr Global Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Global Macro 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 Aqr Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Global Macro has no effect on the direction of Bank of America i.e., Bank of America and Aqr Global go up and down completely randomly.
Pair Corralation between Bank of America and Aqr Global
Considering the 90-day investment horizon Bank of America is expected to generate 2.62 times more return on investment than Aqr Global. However, Bank of America is 2.62 times more volatile than Aqr Global Macro. It trades about 0.13 of its potential returns per unit of risk. Aqr Global Macro is currently generating about 0.01 per unit of risk. If you would invest 3,036 in Bank of America on September 3, 2024 and sell it today you would earn a total of 1,668 from holding Bank of America or generate 54.94% 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. Aqr Global Macro
Performance |
| Timeline |
| Bank of America |
| Aqr Global Macro |
Bank of America and Aqr Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Aqr Global
The main advantage of trading using opposite Bank of America and Aqr Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Aqr Global 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 Aqr Global will offset losses from the drop in Aqr Global's long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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