Correlation Between Bank of America and Touchstone Small
Can any of the company-specific risk be diversified away by investing in both Bank of America and Touchstone Small 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 Touchstone Small 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 Touchstone Small Pany, you can compare the effects of market volatilities on Bank of America and Touchstone Small 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 Touchstone Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Touchstone Small.
Diversification Opportunities for Bank of America and Touchstone Small
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Touchstone is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Touchstone Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small Pany 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 Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Pany has no effect on the direction of Bank of America i.e., Bank of America and Touchstone Small go up and down completely randomly.
Pair Corralation between Bank of America and Touchstone Small
Considering the 90-day investment horizon Bank of America is expected to generate 1.05 times more return on investment than Touchstone Small. However, Bank of America is 1.05 times more volatile than Touchstone Small Pany. It trades about 0.04 of its potential returns per unit of risk. Touchstone Small Pany is currently generating about -0.07 per unit of risk. If you would invest 4,516 in Bank of America on November 6, 2024 and sell it today you would earn a total of 105.00 from holding Bank of America or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Touchstone Small Pany
Performance |
| Timeline |
| Bank of America |
| Touchstone Small Pany |
Bank of America and Touchstone Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Touchstone Small
The main advantage of trading using opposite Bank of America and Touchstone Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Touchstone Small 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 Touchstone Small will offset losses from the drop in Touchstone Small's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Royal Bank of | Bank of America vs. Canadian Imperial Bank |
| Touchstone Small vs. Fidelity Small Cap | Touchstone Small vs. Lord Abbett Small | Touchstone Small vs. Mutual Of America | Touchstone Small vs. Mid Cap Growth Profund |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |