Correlation Between Bank of America and IShares Automation
Can any of the company-specific risk be diversified away by investing in both Bank of America and IShares Automation 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 IShares Automation 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 iShares Automation Robotics, you can compare the effects of market volatilities on Bank of America and IShares Automation 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 IShares Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and IShares Automation.
Diversification Opportunities for Bank of America and IShares Automation
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and IShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and iShares Automation Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Automation 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 IShares Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Automation has no effect on the direction of Bank of America i.e., Bank of America and IShares Automation go up and down completely randomly.
Pair Corralation between Bank of America and IShares Automation
Considering the 90-day investment horizon Bank of America is expected to generate 1.59 times more return on investment than IShares Automation. However, Bank of America is 1.59 times more volatile than iShares Automation Robotics. It trades about 0.29 of its potential returns per unit of risk. iShares Automation Robotics is currently generating about 0.14 per unit of risk. If you would invest 4,231 in Bank of America on August 31, 2024 and sell it today you would earn a total of 546.00 from holding Bank of America or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bank of America vs. iShares Automation Robotics
Performance |
| Timeline |
| Bank of America |
| iShares Automation |
Bank of America and IShares Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and IShares Automation
The main advantage of trading using opposite Bank of America and IShares Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, IShares Automation 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 IShares Automation will offset losses from the drop in IShares Automation's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| IShares Automation vs. iShares MSCI Japan | IShares Automation vs. iShares JP Morgan | IShares Automation vs. iShares MSCI Europe | IShares Automation vs. iShares Nasdaq Biotechnology |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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