Correlation Between Bank of America and 1290 Retirement
Can any of the company-specific risk be diversified away by investing in both Bank of America and 1290 Retirement 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 1290 Retirement 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 1290 Retirement 2030, you can compare the effects of market volatilities on Bank of America and 1290 Retirement 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 1290 Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and 1290 Retirement.
Diversification Opportunities for Bank of America and 1290 Retirement
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and 1290 is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and 1290 Retirement 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1290 Retirement 2030 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 1290 Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1290 Retirement 2030 has no effect on the direction of Bank of America i.e., Bank of America and 1290 Retirement go up and down completely randomly.
Pair Corralation between Bank of America and 1290 Retirement
Considering the 90-day investment horizon Bank of America is expected to generate 2.95 times more return on investment than 1290 Retirement. However, Bank of America is 2.95 times more volatile than 1290 Retirement 2030. It trades about 0.06 of its potential returns per unit of risk. 1290 Retirement 2030 is currently generating about 0.08 per unit of risk. If you would invest 3,079 in Bank of America on August 30, 2024 and sell it today you would earn a total of 1,698 from holding Bank of America or generate 55.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. 1290 Retirement 2030
Performance |
| Timeline |
| Bank of America |
| 1290 Retirement 2030 |
Bank of America and 1290 Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and 1290 Retirement
The main advantage of trading using opposite Bank of America and 1290 Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, 1290 Retirement 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 1290 Retirement will offset losses from the drop in 1290 Retirement'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. JPMorgan Chase Co |
| 1290 Retirement vs. Vanguard Target Retirement | 1290 Retirement vs. American Funds 2030 | 1290 Retirement vs. American Funds 2030 | 1290 Retirement vs. Fidelity Freedom 2030 |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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