Correlation Between Bank of America and Sierra Tactical
Can any of the company-specific risk be diversified away by investing in both Bank of America and Sierra Tactical 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 Sierra Tactical 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 Sierra Tactical Risk, you can compare the effects of market volatilities on Bank of America and Sierra Tactical 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 Sierra Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Sierra Tactical.
Diversification Opportunities for Bank of America and Sierra Tactical
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Sierra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Sierra Tactical Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Tactical Risk 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 Sierra Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Tactical Risk has no effect on the direction of Bank of America i.e., Bank of America and Sierra Tactical go up and down completely randomly.
Pair Corralation between Bank of America and Sierra Tactical
If you would invest 4,621 in Bank of America on November 9, 2024 and sell it today you would earn a total of 153.00 from holding Bank of America or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 5.0% |
| Values | Daily Returns |
Bank of America vs. Sierra Tactical Risk
Performance |
| Timeline |
| Bank of America |
| Sierra Tactical Risk |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Bank of America and Sierra Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Sierra Tactical
The main advantage of trading using opposite Bank of America and Sierra Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Sierra Tactical 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 Sierra Tactical will offset losses from the drop in Sierra Tactical's 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 |
| Sierra Tactical vs. Transamerica High Yield | Sierra Tactical vs. Artisan High Income | Sierra Tactical vs. The Hartford Floating | Sierra Tactical vs. Litman Gregory Masters |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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