Correlation Between Bank of America and Manager Directed
Can any of the company-specific risk be diversified away by investing in both Bank of America and Manager Directed 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 Manager Directed 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 Manager Directed Portfolios, you can compare the effects of market volatilities on Bank of America and Manager Directed 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 Manager Directed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Manager Directed.
Diversification Opportunities for Bank of America and Manager Directed
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Manager is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Manager Directed Portfolios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manager Directed Por 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 Manager Directed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manager Directed Por has no effect on the direction of Bank of America i.e., Bank of America and Manager Directed go up and down completely randomly.
Pair Corralation between Bank of America and Manager Directed
Considering the 90-day investment horizon Bank of America is expected to generate 37.64 times more return on investment than Manager Directed. However, Bank of America is 37.64 times more volatile than Manager Directed Portfolios. It trades about 0.23 of its potential returns per unit of risk. Manager Directed Portfolios is currently generating about 0.34 per unit of risk. If you would invest 4,011 in Bank of America on September 4, 2024 and sell it today you would earn a total of 693.00 from holding Bank of America or generate 17.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Manager Directed Portfolios
Performance |
| Timeline |
| Bank of America |
| Manager Directed Por |
Bank of America and Manager Directed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Manager Directed
The main advantage of trading using opposite Bank of America and Manager Directed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Manager Directed 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 Manager Directed will offset losses from the drop in Manager Directed's long position.| Bank of America vs. Citigroup | Bank of America vs. Aquagold International | Bank of America vs. Thrivent High Yield | Bank of America vs. Morningstar Unconstrained Allocation |
| Manager Directed vs. Core Alternative ETF | Manager Directed vs. Aptus Drawdown Managed | Manager Directed vs. Swan Hedged Equity | Manager Directed vs. Cambria Value and |
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 CEOs Directory module to screen CEOs from public companies around the world.
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