Correlation Between Bank of America and TVA
Can any of the company-specific risk be diversified away by investing in both Bank of America and TVA 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 TVA 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 TVA Group, you can compare the effects of market volatilities on Bank of America and TVA 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 TVA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and TVA.
Diversification Opportunities for Bank of America and TVA
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and TVA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and TVA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TVA Group 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 TVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TVA Group has no effect on the direction of Bank of America i.e., Bank of America and TVA go up and down completely randomly.
Pair Corralation between Bank of America and TVA
Considering the 90-day investment horizon Bank of America is expected to generate 1.93 times more return on investment than TVA. However, Bank of America is 1.93 times more volatile than TVA Group. It trades about 0.14 of its potential returns per unit of risk. TVA Group is currently generating about -0.07 per unit of risk. If you would invest 2,756 in Bank of America on September 1, 2024 and sell it today you would earn a total of 1,995 from holding Bank of America or generate 72.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Bank of America vs. TVA Group
Performance |
| Timeline |
| Bank of America |
| TVA Group |
Bank of America and TVA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and TVA
The main advantage of trading using opposite Bank of America and TVA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, TVA 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 TVA will offset losses from the drop in TVA's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| TVA vs. HUMANA INC | TVA vs. Aquagold International | TVA vs. Barloworld Ltd ADR | TVA vs. Thrivent High Yield |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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