Correlation Between Bank of America and Tiaa-cref Lifecycle
Can any of the company-specific risk be diversified away by investing in both Bank of America and Tiaa-cref Lifecycle 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 Tiaa-cref Lifecycle 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 Tiaa Cref Lifecycle 2050, you can compare the effects of market volatilities on Bank of America and Tiaa-cref Lifecycle 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 Tiaa-cref Lifecycle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Tiaa-cref Lifecycle.
Diversification Opportunities for Bank of America and Tiaa-cref Lifecycle
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Tiaa-cref is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Tiaa Cref Lifecycle 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Lifecycle 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 Tiaa-cref Lifecycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiaa Cref Lifecycle has no effect on the direction of Bank of America i.e., Bank of America and Tiaa-cref Lifecycle go up and down completely randomly.
Pair Corralation between Bank of America and Tiaa-cref Lifecycle
Considering the 90-day investment horizon Bank of America is expected to generate 2.06 times more return on investment than Tiaa-cref Lifecycle. However, Bank of America is 2.06 times more volatile than Tiaa Cref Lifecycle 2050. It trades about 0.1 of its potential returns per unit of risk. Tiaa Cref Lifecycle 2050 is currently generating about 0.09 per unit of risk. If you would invest 2,810 in Bank of America on September 2, 2024 and sell it today you would earn a total of 1,941 from holding Bank of America or generate 69.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Tiaa Cref Lifecycle 2050
Performance |
| Timeline |
| Bank of America |
| Tiaa Cref Lifecycle |
Bank of America and Tiaa-cref Lifecycle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Tiaa-cref Lifecycle
The main advantage of trading using opposite Bank of America and Tiaa-cref Lifecycle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Tiaa-cref Lifecycle 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 Tiaa-cref Lifecycle will offset losses from the drop in Tiaa-cref Lifecycle'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 |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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