Correlation Between Bank of America and Rising Dollar
Can any of the company-specific risk be diversified away by investing in both Bank of America and Rising Dollar 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 Rising Dollar 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 Rising Dollar Profund, you can compare the effects of market volatilities on Bank of America and Rising Dollar 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 Rising Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Rising Dollar.
Diversification Opportunities for Bank of America and Rising Dollar
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Rising is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Rising Dollar Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rising Dollar Profund 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 Rising Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rising Dollar Profund has no effect on the direction of Bank of America i.e., Bank of America and Rising Dollar go up and down completely randomly.
Pair Corralation between Bank of America and Rising Dollar
Considering the 90-day investment horizon Bank of America is expected to generate 4.04 times more return on investment than Rising Dollar. However, Bank of America is 4.04 times more volatile than Rising Dollar Profund. It trades about 0.11 of its potential returns per unit of risk. Rising Dollar Profund is currently generating about 0.07 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. Rising Dollar Profund
Performance |
| Timeline |
| Bank of America |
| Rising Dollar Profund |
Bank of America and Rising Dollar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Rising Dollar
The main advantage of trading using opposite Bank of America and Rising Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Rising Dollar 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 Rising Dollar will offset losses from the drop in Rising Dollar'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 |
| Rising Dollar vs. Short Real Estate | Rising Dollar vs. Short Real Estate | Rising Dollar vs. Ultrashort Mid Cap Profund | Rising Dollar vs. Ultrashort Mid Cap Profund |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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