Correlation Between Bank of America and Consumer Products
Can any of the company-specific risk be diversified away by investing in both Bank of America and Consumer Products 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 Consumer Products 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 Consumer Products Fund, you can compare the effects of market volatilities on Bank of America and Consumer Products 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 Consumer Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Consumer Products.
Diversification Opportunities for Bank of America and Consumer Products
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Consumer is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Consumer Products Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Products 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 Consumer Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Products has no effect on the direction of Bank of America i.e., Bank of America and Consumer Products go up and down completely randomly.
Pair Corralation between Bank of America and Consumer Products
Considering the 90-day investment horizon Bank of America is expected to generate 3.54 times more return on investment than Consumer Products. However, Bank of America is 3.54 times more volatile than Consumer Products Fund. It trades about 0.27 of its potential returns per unit of risk. Consumer Products Fund is currently generating about 0.22 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 520.00 from holding Bank of America or generate 12.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bank of America vs. Consumer Products Fund
Performance |
| Timeline |
| Bank of America |
| Consumer Products |
Bank of America and Consumer Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Consumer Products
The main advantage of trading using opposite Bank of America and Consumer Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Consumer Products 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 Consumer Products will offset losses from the drop in Consumer Products' 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 |
| Consumer Products vs. T Rowe Price | Consumer Products vs. Oklahoma Municipal Fund | Consumer Products vs. Jpmorgan Short Intermediate Municipal | Consumer Products vs. Federated Ohio Municipal |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |