Correlation Between Bank of America and Vince Holding
Can any of the company-specific risk be diversified away by investing in both Bank of America and Vince Holding 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 Vince Holding 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 Vince Holding Corp, you can compare the effects of market volatilities on Bank of America and Vince Holding 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 Vince Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Vince Holding.
Diversification Opportunities for Bank of America and Vince Holding
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Vince is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Vince Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vince Holding Corp 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 Vince Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vince Holding Corp has no effect on the direction of Bank of America i.e., Bank of America and Vince Holding go up and down completely randomly.
Pair Corralation between Bank of America and Vince Holding
Considering the 90-day investment horizon Bank of America is expected to generate 0.2 times more return on investment than Vince Holding. However, Bank of America is 5.05 times less risky than Vince Holding. It trades about 0.04 of its potential returns per unit of risk. Vince Holding Corp is currently generating about 0.0 per unit of risk. If you would invest 2,825 in Bank of America on January 10, 2025 and sell it today you would earn a total of 890.00 from holding Bank of America or generate 31.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bank of America vs. Vince Holding Corp
Performance |
| Timeline |
| Bank of America |
| Vince Holding Corp |
Bank of America and Vince Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Vince Holding
The main advantage of trading using opposite Bank of America and Vince Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Vince Holding 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 Vince Holding will offset losses from the drop in Vince Holding's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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