Correlation Between Bank of America and Unico American
Can any of the company-specific risk be diversified away by investing in both Bank of America and Unico American 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 Unico American 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 Unico American, you can compare the effects of market volatilities on Bank of America and Unico American 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 Unico American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Unico American.
Diversification Opportunities for Bank of America and Unico American
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Unico is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Unico American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unico American 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 Unico American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unico American has no effect on the direction of Bank of America i.e., Bank of America and Unico American go up and down completely randomly.
Pair Corralation between Bank of America and Unico American
Considering the 90-day investment horizon Bank of America is expected to generate 9.23 times less return on investment than Unico American. But when comparing it to its historical volatility, Bank of America is 9.45 times less risky than Unico American. It trades about 0.11 of its potential returns per unit of risk. Unico American is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Unico American on August 29, 2024 and sell it today you would earn a total of 4.00 from holding Unico American or generate 200.0% 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. Unico American
Performance |
| Timeline |
| Bank of America |
| Unico American |
Bank of America and Unico American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Unico American
The main advantage of trading using opposite Bank of America and Unico American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Unico American 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 Unico American will offset losses from the drop in Unico American's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Nova |
| Unico American vs. Invesco High Income | Unico American vs. Blackrock Muniholdings Ny | Unico American vs. MFS Investment Grade | Unico American vs. Federated Premier Municipal |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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