Correlation Between Bank of America and JM Smucker
Can any of the company-specific risk be diversified away by investing in both Bank of America and JM Smucker 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 JM Smucker 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 JM Smucker, you can compare the effects of market volatilities on Bank of America and JM Smucker 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 JM Smucker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and JM Smucker.
Diversification Opportunities for Bank of America and JM Smucker
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and SJM is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and JM Smucker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JM Smucker 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 JM Smucker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JM Smucker has no effect on the direction of Bank of America i.e., Bank of America and JM Smucker go up and down completely randomly.
Pair Corralation between Bank of America and JM Smucker
Considering the 90-day investment horizon Bank of America is expected to generate 1.56 times more return on investment than JM Smucker. However, Bank of America is 1.56 times more volatile than JM Smucker. It trades about 0.23 of its potential returns per unit of risk. JM Smucker is currently generating about -0.08 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. JM Smucker
Performance |
| Timeline |
| Bank of America |
| JM Smucker |
Bank of America and JM Smucker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and JM Smucker
The main advantage of trading using opposite Bank of America and JM Smucker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, JM Smucker 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 JM Smucker will offset losses from the drop in JM Smucker'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 |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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