Correlation Between Bank of America and Robo Global
Can any of the company-specific risk be diversified away by investing in both Bank of America and Robo Global 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 Robo Global 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 Robo Global Artificial, you can compare the effects of market volatilities on Bank of America and Robo Global 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 Robo Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Robo Global.
Diversification Opportunities for Bank of America and Robo Global
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Robo is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Robo Global Artificial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robo Global Artificial 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 Robo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robo Global Artificial has no effect on the direction of Bank of America i.e., Bank of America and Robo Global go up and down completely randomly.
Pair Corralation between Bank of America and Robo Global
Considering the 90-day investment horizon Bank of America is expected to generate 0.97 times more return on investment than Robo Global. However, Bank of America is 1.03 times less risky than Robo Global. It trades about 0.27 of its potential returns per unit of risk. Robo Global Artificial is currently generating about 0.07 per unit of risk. If you would invest 4,389 in Bank of America on October 22, 2024 and sell it today you would earn a total of 264.00 from holding Bank of America or generate 6.02% 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. Robo Global Artificial
Performance |
| Timeline |
| Bank of America |
| Robo Global Artificial |
Bank of America and Robo Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Robo Global
The main advantage of trading using opposite Bank of America and Robo Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Robo Global 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 Robo Global will offset losses from the drop in Robo Global'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 |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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