Correlation Between Bank of America and Schwab International
Can any of the company-specific risk be diversified away by investing in both Bank of America and Schwab International 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 Schwab International 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 Schwab International Dividend, you can compare the effects of market volatilities on Bank of America and Schwab International 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 Schwab International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Schwab International.
Diversification Opportunities for Bank of America and Schwab International
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Schwab is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Schwab International Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab International 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 Schwab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab International has no effect on the direction of Bank of America i.e., Bank of America and Schwab International go up and down completely randomly.
Pair Corralation between Bank of America and Schwab International
Considering the 90-day investment horizon Bank of America is expected to under-perform the Schwab International. In addition to that, Bank of America is 3.86 times more volatile than Schwab International Dividend. It trades about -0.19 of its total potential returns per unit of risk. Schwab International Dividend is currently generating about 0.33 per unit of volatility. If you would invest 2,445 in Schwab International Dividend on January 2, 2025 and sell it today you would earn a total of 98.00 from holding Schwab International Dividend or generate 4.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bank of America vs. Schwab International Dividend
Performance |
| Timeline |
| Bank of America |
| Schwab International |
Bank of America and Schwab International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Schwab International
The main advantage of trading using opposite Bank of America and Schwab International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Schwab International 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 Schwab International will offset losses from the drop in Schwab International's long position.| Bank of America vs. PJT Partners | Bank of America vs. National Bank Holdings | Bank of America vs. FB Financial Corp | Bank of America vs. Northrim BanCorp |
| Schwab International vs. Strategy Shares | Schwab International vs. Freedom Day Dividend | Schwab International vs. Franklin Templeton ETF | Schwab International vs. iShares MSCI China |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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