Correlation Between Bank of America and AdvisorShares STAR
Can any of the company-specific risk be diversified away by investing in both Bank of America and AdvisorShares STAR 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 AdvisorShares STAR 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 AdvisorShares STAR Global, you can compare the effects of market volatilities on Bank of America and AdvisorShares STAR 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 AdvisorShares STAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and AdvisorShares STAR.
Diversification Opportunities for Bank of America and AdvisorShares STAR
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and AdvisorShares is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and AdvisorShares STAR Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares STAR Global 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 AdvisorShares STAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares STAR Global has no effect on the direction of Bank of America i.e., Bank of America and AdvisorShares STAR go up and down completely randomly.
Pair Corralation between Bank of America and AdvisorShares STAR
Considering the 90-day investment horizon Bank of America is expected to generate 2.47 times more return on investment than AdvisorShares STAR. However, Bank of America is 2.47 times more volatile than AdvisorShares STAR Global. It trades about 0.1 of its potential returns per unit of risk. AdvisorShares STAR Global is currently generating about 0.09 per unit of risk. If you would invest 2,810 in Bank of America on September 2, 2024 and sell it today you would earn a total of 1,941 from holding Bank of America or generate 69.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. AdvisorShares STAR Global
Performance |
| Timeline |
| Bank of America |
| AdvisorShares STAR Global |
Bank of America and AdvisorShares STAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and AdvisorShares STAR
The main advantage of trading using opposite Bank of America and AdvisorShares STAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, AdvisorShares STAR 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 AdvisorShares STAR will offset losses from the drop in AdvisorShares STAR'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 |
| AdvisorShares STAR vs. AdvisorShares Dorsey Wright | AdvisorShares STAR vs. Vident Core Bond | AdvisorShares STAR vs. WBI BullBear Quality | AdvisorShares STAR vs. WBI BullBear Value |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |