Correlation Between Bank of America and Salient Mlp
Can any of the company-specific risk be diversified away by investing in both Bank of America and Salient Mlp 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 Salient Mlp 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 Salient Mlp Energy, you can compare the effects of market volatilities on Bank of America and Salient Mlp 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 Salient Mlp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Salient Mlp.
Diversification Opportunities for Bank of America and Salient Mlp
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Salient is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Salient Mlp Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Mlp Energy 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 Salient Mlp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Mlp Energy has no effect on the direction of Bank of America i.e., Bank of America and Salient Mlp go up and down completely randomly.
Pair Corralation between Bank of America and Salient Mlp
Considering the 90-day investment horizon Bank of America is expected to generate 1.19 times less return on investment than Salient Mlp. In addition to that, Bank of America is 1.79 times more volatile than Salient Mlp Energy. It trades about 0.1 of its total potential returns per unit of risk. Salient Mlp Energy is currently generating about 0.22 per unit of volatility. If you would invest 860.00 in Salient Mlp Energy on September 1, 2024 and sell it today you would earn a total of 231.00 from holding Salient Mlp Energy or generate 26.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Bank of America vs. Salient Mlp Energy
Performance |
| Timeline |
| Bank of America |
| Salient Mlp Energy |
Bank of America and Salient Mlp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Salient Mlp
The main advantage of trading using opposite Bank of America and Salient Mlp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Salient Mlp 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 Salient Mlp will offset losses from the drop in Salient Mlp's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Salient Mlp vs. Legg Mason Partners | Salient Mlp vs. Small Pany Growth | Salient Mlp vs. Touchstone Small Cap | Salient Mlp vs. L Abbett Growth |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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