Correlation Between Bank of America and FT Vest
Can any of the company-specific risk be diversified away by investing in both Bank of America and FT Vest 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 FT Vest 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 FT Vest Nasdaq 100, you can compare the effects of market volatilities on Bank of America and FT Vest 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 FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and FT Vest.
Diversification Opportunities for Bank of America and FT Vest
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and QMNV is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and FT Vest Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Nasdaq 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 FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Nasdaq has no effect on the direction of Bank of America i.e., Bank of America and FT Vest go up and down completely randomly.
Pair Corralation between Bank of America and FT Vest
Considering the 90-day investment horizon Bank of America is expected to generate 6.1 times more return on investment than FT Vest. However, Bank of America is 6.1 times more volatile than FT Vest Nasdaq 100. It trades about 0.11 of its potential returns per unit of risk. FT Vest Nasdaq 100 is currently generating about 0.5 per unit of risk. If you would invest 2,797 in Bank of America on September 12, 2024 and sell it today you would earn a total of 1,802 from holding Bank of America or generate 64.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 5.14% |
| Values | Daily Returns |
Bank of America vs. FT Vest Nasdaq 100
Performance |
| Timeline |
| Bank of America |
| FT Vest Nasdaq |
Bank of America and FT Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and FT Vest
The main advantage of trading using opposite Bank of America and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, FT Vest 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 FT Vest will offset losses from the drop in FT Vest'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 |
| FT Vest vs. FT Vest Equity | FT Vest vs. Northern Lights | FT Vest vs. Dimensional International High | FT Vest vs. JPMorgan Fundamental Data |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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