Correlation Between Bank of America and Royce Total
Can any of the company-specific risk be diversified away by investing in both Bank of America and Royce Total 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 Royce Total 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 Royce Total Return, you can compare the effects of market volatilities on Bank of America and Royce Total 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 Royce Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Royce Total.
Diversification Opportunities for Bank of America and Royce Total
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Royce is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Royce Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Total Return 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 Royce Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Total Return has no effect on the direction of Bank of America i.e., Bank of America and Royce Total go up and down completely randomly.
Pair Corralation between Bank of America and Royce Total
Considering the 90-day investment horizon Bank of America is expected to generate 1.32 times more return on investment than Royce Total. However, Bank of America is 1.32 times more volatile than Royce Total Return. It trades about 0.23 of its potential returns per unit of risk. Royce Total Return is currently generating about 0.24 per unit of risk. If you would invest 4,234 in Bank of America on August 24, 2024 and sell it today you would earn a total of 466.00 from holding Bank of America or generate 11.01% 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. Royce Total Return
Performance |
| Timeline |
| Bank of America |
| Royce Total Return |
Bank of America and Royce Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Royce Total
The main advantage of trading using opposite Bank of America and Royce Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Royce Total 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 Royce Total will offset losses from the drop in Royce Total's long position.| Bank of America vs. Amtech Systems | Bank of America vs. Gold Fields Ltd | Bank of America vs. Aegean Airlines SA | Bank of America vs. Merck Company |
| Royce Total vs. Harbor International Fund | Royce Total vs. John Hancock Disciplined | Royce Total vs. Ridgeworth Ceredex Small | Royce Total vs. Jpmorgan Value Advantage |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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