Correlation Between Bank of America and Vanguard Funds
Can any of the company-specific risk be diversified away by investing in both Bank of America and Vanguard Funds 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 Vanguard Funds 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 Vanguard Funds Public, you can compare the effects of market volatilities on Bank of America and Vanguard Funds 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 Vanguard Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Vanguard Funds.
Diversification Opportunities for Bank of America and Vanguard Funds
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Vanguard is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Vanguard Funds Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Funds Public 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 Vanguard Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Funds Public has no effect on the direction of Bank of America i.e., Bank of America and Vanguard Funds go up and down completely randomly.
Pair Corralation between Bank of America and Vanguard Funds
Considering the 90-day investment horizon Bank of America is expected to generate 9.08 times more return on investment than Vanguard Funds. However, Bank of America is 9.08 times more volatile than Vanguard Funds Public. It trades about 0.27 of its potential returns per unit of risk. Vanguard Funds Public is currently generating about 0.0 per unit of risk. If you would invest 3,940 in Bank of America on August 28, 2024 and sell it today you would earn a total of 835.00 from holding Bank of America or generate 21.19% 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. Vanguard Funds Public
Performance |
| Timeline |
| Bank of America |
| Vanguard Funds Public |
Bank of America and Vanguard Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Vanguard Funds
The main advantage of trading using opposite Bank of America and Vanguard Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Vanguard Funds 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 Vanguard Funds will offset losses from the drop in Vanguard Funds' long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Nova |
| Vanguard Funds vs. Blackrock Muniholdings Ny | Vanguard Funds vs. MFS Investment Grade | Vanguard Funds vs. Eaton Vance National | Vanguard Funds vs. Invesco High Income |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |