Correlation Between Bank of America and Tema ETF
Can any of the company-specific risk be diversified away by investing in both Bank of America and Tema ETF 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 Tema ETF 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 Tema ETF Trust, you can compare the effects of market volatilities on Bank of America and Tema ETF 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 Tema ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Tema ETF.
Diversification Opportunities for Bank of America and Tema ETF
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Tema is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Tema ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tema ETF Trust 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 Tema ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tema ETF Trust has no effect on the direction of Bank of America i.e., Bank of America and Tema ETF go up and down completely randomly.
Pair Corralation between Bank of America and Tema ETF
Considering the 90-day investment horizon Bank of America is expected to generate 1.26 times more return on investment than Tema ETF. However, Bank of America is 1.26 times more volatile than Tema ETF Trust. It trades about 0.24 of its potential returns per unit of risk. Tema ETF Trust is currently generating about 0.2 per unit of risk. If you would invest 4,262 in Bank of America on August 27, 2024 and sell it today you would earn a total of 438.00 from holding Bank of America or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Tema ETF Trust
Performance |
| Timeline |
| Bank of America |
| Tema ETF Trust |
Bank of America and Tema ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Tema ETF
The main advantage of trading using opposite Bank of America and Tema ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Tema ETF 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 Tema ETF will offset losses from the drop in Tema ETF's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Tema ETF vs. iShares Dividend and | Tema ETF vs. Martin Currie Sustainable | Tema ETF vs. VictoryShares THB Mid | Tema ETF vs. Mast Global Battery |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |