Correlation Between Bank of America and AIM ETF
Can any of the company-specific risk be diversified away by investing in both Bank of America and AIM 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 AIM 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 AIM ETF Products, you can compare the effects of market volatilities on Bank of America and AIM 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 AIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and AIM ETF.
Diversification Opportunities for Bank of America and AIM ETF
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and AIM is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and AIM ETF Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ETF 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 AIM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ETF Products has no effect on the direction of Bank of America i.e., Bank of America and AIM ETF go up and down completely randomly.
Pair Corralation between Bank of America and AIM ETF
Considering the 90-day investment horizon Bank of America is expected to generate 4.02 times more return on investment than AIM ETF. However, Bank of America is 4.02 times more volatile than AIM ETF Products. It trades about 0.05 of its potential returns per unit of risk. AIM ETF Products is currently generating about 0.14 per unit of risk. If you would invest 3,278 in Bank of America on August 25, 2024 and sell it today you would earn a total of 1,422 from holding Bank of America or generate 43.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 37.63% |
| Values | Daily Returns |
Bank of America vs. AIM ETF Products
Performance |
| Timeline |
| Bank of America |
| AIM ETF Products |
Bank of America and AIM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and AIM ETF
The main advantage of trading using opposite Bank of America and AIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, AIM 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 AIM ETF will offset losses from the drop in AIM 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 |
| AIM ETF vs. FT Vest Equity | AIM ETF vs. Northern Lights | AIM ETF vs. Dimensional International High | AIM ETF vs. First Trust Exchange Traded |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |