Correlation Between Bank of America and Tradr 2X
Can any of the company-specific risk be diversified away by investing in both Bank of America and Tradr 2X 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 Tradr 2X 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 Tradr 2X Long, you can compare the effects of market volatilities on Bank of America and Tradr 2X 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 Tradr 2X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Tradr 2X.
Diversification Opportunities for Bank of America and Tradr 2X
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Tradr is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Tradr 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradr 2X Long 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 Tradr 2X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradr 2X Long has no effect on the direction of Bank of America i.e., Bank of America and Tradr 2X go up and down completely randomly.
Pair Corralation between Bank of America and Tradr 2X
Considering the 90-day investment horizon Bank of America is expected to generate 0.41 times more return on investment than Tradr 2X. However, Bank of America is 2.43 times less risky than Tradr 2X. It trades about 0.06 of its potential returns per unit of risk. Tradr 2X Long is currently generating about 0.0 per unit of risk. If you would invest 3,115 in Bank of America on September 3, 2024 and sell it today you would earn a total of 1,589 from holding Bank of America or generate 51.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 12.93% |
| Values | Daily Returns |
Bank of America vs. Tradr 2X Long
Performance |
| Timeline |
| Bank of America |
| Tradr 2X Long |
Bank of America and Tradr 2X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Tradr 2X
The main advantage of trading using opposite Bank of America and Tradr 2X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Tradr 2X 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 Tradr 2X will offset losses from the drop in Tradr 2X's long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| Tradr 2X vs. ProShares Ultra SP500 | Tradr 2X vs. Direxion Daily SP500 | Tradr 2X vs. ProShares Ultra QQQ | Tradr 2X vs. Direxion Daily SP |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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