Correlation Between Bank of America and Hartford Schroders
Can any of the company-specific risk be diversified away by investing in both Bank of America and Hartford Schroders 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 Hartford Schroders 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 Hartford Schroders Smallmid, you can compare the effects of market volatilities on Bank of America and Hartford Schroders 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 Hartford Schroders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Hartford Schroders.
Diversification Opportunities for Bank of America and Hartford Schroders
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Hartford is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Hartford Schroders Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Schroders 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 Hartford Schroders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Schroders has no effect on the direction of Bank of America i.e., Bank of America and Hartford Schroders go up and down completely randomly.
Pair Corralation between Bank of America and Hartford Schroders
Considering the 90-day investment horizon Bank of America is expected to generate 2.29 times more return on investment than Hartford Schroders. However, Bank of America is 2.29 times more volatile than Hartford Schroders Smallmid. It trades about -0.04 of its potential returns per unit of risk. Hartford Schroders Smallmid is currently generating about -0.31 per unit of risk. If you would invest 4,672 in Bank of America on December 1, 2024 and sell it today you would lose (62.00) from holding Bank of America or give up 1.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Hartford Schroders Smallmid
Performance |
| Timeline |
| Bank of America |
| Hartford Schroders |
Bank of America and Hartford Schroders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Hartford Schroders
The main advantage of trading using opposite Bank of America and Hartford Schroders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Hartford Schroders 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 Hartford Schroders will offset losses from the drop in Hartford Schroders' long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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