Correlation Between Bank of America and Innovator Capital
Can any of the company-specific risk be diversified away by investing in both Bank of America and Innovator Capital 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 Innovator Capital 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 Innovator Capital Management, you can compare the effects of market volatilities on Bank of America and Innovator Capital 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 Innovator Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Innovator Capital.
Diversification Opportunities for Bank of America and Innovator Capital
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Innovator is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Innovator Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Capital 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 Innovator Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Capital has no effect on the direction of Bank of America i.e., Bank of America and Innovator Capital go up and down completely randomly.
Pair Corralation between Bank of America and Innovator Capital
If you would invest 4,262 in Bank of America on August 27, 2024 and sell it today you would earn a total of 438.00 from holding Bank of America or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Bank of America vs. Innovator Capital Management
Performance |
| Timeline |
| Bank of America |
| Innovator Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Bank of America and Innovator Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Innovator Capital
The main advantage of trading using opposite Bank of America and Innovator Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Innovator Capital 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 Innovator Capital will offset losses from the drop in Innovator Capital'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 |
| Innovator Capital vs. Blackrock Muniholdings Ny | Innovator Capital vs. MFS Investment Grade | Innovator Capital vs. Eaton Vance National | Innovator Capital vs. Invesco High Income |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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