Correlation Between Bank of America and TD Active
Can any of the company-specific risk be diversified away by investing in both Bank of America and TD Active 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 TD Active 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 TD Active Global, you can compare the effects of market volatilities on Bank of America and TD Active 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 TD Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and TD Active.
Diversification Opportunities for Bank of America and TD Active
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and TINF is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and TD Active Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Active Global 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 TD Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Active Global has no effect on the direction of Bank of America i.e., Bank of America and TD Active go up and down completely randomly.
Pair Corralation between Bank of America and TD Active
Considering the 90-day investment horizon Bank of America is expected to generate 2.45 times more return on investment than TD Active. However, Bank of America is 2.45 times more volatile than TD Active Global. It trades about 0.05 of its potential returns per unit of risk. TD Active Global is currently generating about 0.08 per unit of risk. If you would invest 3,278 in Bank of America on August 25, 2024 and sell it today you would earn a total of 1,422 from holding Bank of America or generate 43.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bank of America vs. TD Active Global
Performance |
| Timeline |
| Bank of America |
| TD Active Global |
Bank of America and TD Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and TD Active
The main advantage of trading using opposite Bank of America and TD Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, TD Active 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 TD Active will offset losses from the drop in TD Active's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| TD Active vs. TD Active Global | TD Active vs. TD Active Global | TD Active vs. TD Active Enhanced | TD Active vs. TD Active Global |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |