Correlation Between Bank of America and Invesco Senior
Can any of the company-specific risk be diversified away by investing in both Bank of America and Invesco Senior 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 Invesco Senior 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 Invesco Senior Income, you can compare the effects of market volatilities on Bank of America and Invesco Senior 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 Invesco Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Invesco Senior.
Diversification Opportunities for Bank of America and Invesco Senior
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Invesco is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Invesco Senior Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Senior Income 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 Invesco Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Senior Income has no effect on the direction of Bank of America i.e., Bank of America and Invesco Senior go up and down completely randomly.
Pair Corralation between Bank of America and Invesco Senior
Considering the 90-day investment horizon Bank of America is expected to generate 3.02 times more return on investment than Invesco Senior. However, Bank of America is 3.02 times more volatile than Invesco Senior Income. It trades about 0.21 of its potential returns per unit of risk. Invesco Senior Income is currently generating about 0.12 per unit of risk. If you would invest 4,234 in Bank of America on August 24, 2024 and sell it today you would earn a total of 412.00 from holding Bank of America or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Invesco Senior Income
Performance |
| Timeline |
| Bank of America |
| Invesco Senior Income |
Bank of America and Invesco Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Invesco Senior
The main advantage of trading using opposite Bank of America and Invesco Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Invesco Senior 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 Invesco Senior will offset losses from the drop in Invesco Senior's long position.| Bank of America vs. Amtech Systems | Bank of America vs. Gold Fields Ltd | Bank of America vs. Aegean Airlines SA | Bank of America vs. Merck Company |
| Invesco Senior vs. Nuveen Floating Rate | Invesco Senior vs. Blackrock Muni Intermediate | Invesco Senior vs. Eaton Vance Senior | Invesco Senior vs. BlackRock Floating Rate |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Transaction History View history of all your transactions and understand their impact on performance |