Correlation Between Bank of America and RPAR Risk
Can any of the company-specific risk be diversified away by investing in both Bank of America and RPAR Risk 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 RPAR Risk 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 RPAR Risk Parity, you can compare the effects of market volatilities on Bank of America and RPAR Risk 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 RPAR Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and RPAR Risk.
Diversification Opportunities for Bank of America and RPAR Risk
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and RPAR is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and RPAR Risk Parity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPAR Risk Parity 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 RPAR Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPAR Risk Parity has no effect on the direction of Bank of America i.e., Bank of America and RPAR Risk go up and down completely randomly.
Pair Corralation between Bank of America and RPAR Risk
Considering the 90-day investment horizon Bank of America is expected to generate 2.33 times more return on investment than RPAR Risk. However, Bank of America is 2.33 times more volatile than RPAR Risk Parity. It trades about 0.1 of its potential returns per unit of risk. RPAR Risk Parity is currently generating about 0.05 per unit of risk. If you would invest 3,938 in Bank of America on September 1, 2024 and sell it today you would earn a total of 813.00 from holding Bank of America or generate 20.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. RPAR Risk Parity
Performance |
| Timeline |
| Bank of America |
| RPAR Risk Parity |
Bank of America and RPAR Risk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and RPAR Risk
The main advantage of trading using opposite Bank of America and RPAR Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, RPAR Risk 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 RPAR Risk will offset losses from the drop in RPAR Risk'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 |
| RPAR Risk vs. Amplify BlackSwan Growth | RPAR Risk vs. WisdomTree 9060 Balanced | RPAR Risk vs. iShares Core Growth | RPAR Risk vs. PIMCO 15 Year |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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