Correlation Between Bank of America and Moderately Conservative
Can any of the company-specific risk be diversified away by investing in both Bank of America and Moderately Conservative 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 Moderately Conservative 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 Moderately Servative Balanced, you can compare the effects of market volatilities on Bank of America and Moderately Conservative 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 Moderately Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Moderately Conservative.
Diversification Opportunities for Bank of America and Moderately Conservative
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Moderately is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Moderately Servative Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderately Conservative 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 Moderately Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderately Conservative has no effect on the direction of Bank of America i.e., Bank of America and Moderately Conservative go up and down completely randomly.
Pair Corralation between Bank of America and Moderately Conservative
Considering the 90-day investment horizon Bank of America is expected to generate 3.65 times more return on investment than Moderately Conservative. However, Bank of America is 3.65 times more volatile than Moderately Servative Balanced. It trades about 0.31 of its potential returns per unit of risk. Moderately Servative Balanced is currently generating about 0.33 per unit of risk. If you would invest 4,182 in Bank of America on September 1, 2024 and sell it today you would earn a total of 569.00 from holding Bank of America or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Moderately Servative Balanced
Performance |
| Timeline |
| Bank of America |
| Moderately Conservative |
Bank of America and Moderately Conservative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Moderately Conservative
The main advantage of trading using opposite Bank of America and Moderately Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Moderately Conservative 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 Moderately Conservative will offset losses from the drop in Moderately Conservative's long position.| Bank of America vs. Citigroup | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |