Correlation Between Bank of America and Virtus Investment
Can any of the company-specific risk be diversified away by investing in both Bank of America and Virtus Investment 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 Virtus Investment 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 Virtus Investment Partners, you can compare the effects of market volatilities on Bank of America and Virtus Investment 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 Virtus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Virtus Investment.
Diversification Opportunities for Bank of America and Virtus Investment
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Virtus is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of Bank of America i.e., Bank of America and Virtus Investment go up and down completely randomly.
Pair Corralation between Bank of America and Virtus Investment
Considering the 90-day investment horizon Bank of America is expected to generate 1.22 times less return on investment than Virtus Investment. But when comparing it to its historical volatility, Bank of America is 1.26 times less risky than Virtus Investment. It trades about 0.29 of its potential returns per unit of risk. Virtus Investment Partners is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 20,375 in Virtus Investment Partners on August 31, 2024 and sell it today you would earn a total of 3,225 from holding Virtus Investment Partners or generate 15.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Virtus Investment Partners
Performance |
| Timeline |
| Bank of America |
| Virtus Investment |
Bank of America and Virtus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Virtus Investment
The main advantage of trading using opposite Bank of America and Virtus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Virtus Investment 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 Virtus Investment will offset losses from the drop in Virtus Investment's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| Virtus Investment vs. Ameriprise Financial | Virtus Investment vs. Ares Management Corp | Virtus Investment vs. Superior Plus Corp | Virtus Investment vs. NMI Holdings |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |