Correlation Between Bank of America and Sierra Core
Can any of the company-specific risk be diversified away by investing in both Bank of America and Sierra Core 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 Sierra Core 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 Sierra E Retirement, you can compare the effects of market volatilities on Bank of America and Sierra Core 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 Sierra Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Sierra Core.
Diversification Opportunities for Bank of America and Sierra Core
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Sierra is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Sierra E Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra E Retirement 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 Sierra Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra E Retirement has no effect on the direction of Bank of America i.e., Bank of America and Sierra Core go up and down completely randomly.
Pair Corralation between Bank of America and Sierra Core
Considering the 90-day investment horizon Bank of America is expected to generate 4.94 times more return on investment than Sierra Core. However, Bank of America is 4.94 times more volatile than Sierra E Retirement. It trades about 0.08 of its potential returns per unit of risk. Sierra E Retirement is currently generating about 0.08 per unit of risk. If you would invest 2,714 in Bank of America on November 1, 2024 and sell it today you would earn a total of 1,958 from holding Bank of America or generate 72.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Sierra E Retirement
Performance |
| Timeline |
| Bank of America |
| Sierra E Retirement |
Bank of America and Sierra Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Sierra Core
The main advantage of trading using opposite Bank of America and Sierra Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Sierra Core 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 Sierra Core will offset losses from the drop in Sierra Core's long position.| Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Canadian Imperial Bank |
| Sierra Core vs. Guidepath Managed Futures | Sierra Core vs. Arrow Managed Futures | Sierra Core vs. Cref Inflation Linked Bond | Sierra Core vs. Atac Inflation Rotation |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |