Correlation Between Bank of America and Invesco NASDAQ
Can any of the company-specific risk be diversified away by investing in both Bank of America and Invesco NASDAQ 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 Invesco NASDAQ 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 Invesco NASDAQ 100, you can compare the effects of market volatilities on Bank of America and Invesco NASDAQ 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 Invesco NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Invesco NASDAQ.
Diversification Opportunities for Bank of America and Invesco NASDAQ
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Invesco is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Invesco NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco NASDAQ 100 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 Invesco NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco NASDAQ 100 has no effect on the direction of Bank of America i.e., Bank of America and Invesco NASDAQ go up and down completely randomly.
Pair Corralation between Bank of America and Invesco NASDAQ
Considering the 90-day investment horizon Bank of America is expected to generate 1.64 times more return on investment than Invesco NASDAQ. However, Bank of America is 1.64 times more volatile than Invesco NASDAQ 100. It trades about 0.11 of its potential returns per unit of risk. Invesco NASDAQ 100 is currently generating about 0.1 per unit of risk. If you would invest 3,918 in Bank of America on September 2, 2024 and sell it today you would earn a total of 833.00 from holding Bank of America or generate 21.26% 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. Invesco NASDAQ 100
Performance |
| Timeline |
| Bank of America |
| Invesco NASDAQ 100 |
Bank of America and Invesco NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Invesco NASDAQ
The main advantage of trading using opposite Bank of America and Invesco NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Invesco NASDAQ 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 Invesco NASDAQ will offset losses from the drop in Invesco NASDAQ's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Invesco NASDAQ vs. BMO SP 500 | Invesco NASDAQ vs. Vanguard SP 500 | Invesco NASDAQ vs. BMO SP 500 | Invesco NASDAQ vs. BMO NASDAQ 100 |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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