Correlation Between Bank of America and Vanguard Windsor
Can any of the company-specific risk be diversified away by investing in both Bank of America and Vanguard Windsor 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 Windsor 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 Windsor Fund, you can compare the effects of market volatilities on Bank of America and Vanguard Windsor 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 Windsor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Vanguard Windsor.
Diversification Opportunities for Bank of America and Vanguard Windsor
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Vanguard is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Vanguard Windsor Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Windsor 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 Windsor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Windsor has no effect on the direction of Bank of America i.e., Bank of America and Vanguard Windsor go up and down completely randomly.
Pair Corralation between Bank of America and Vanguard Windsor
Considering the 90-day investment horizon Bank of America is expected to under-perform the Vanguard Windsor. In addition to that, Bank of America is 1.69 times more volatile than Vanguard Windsor Fund. It trades about -0.34 of its total potential returns per unit of risk. Vanguard Windsor Fund is currently generating about -0.15 per unit of volatility. If you would invest 7,394 in Vanguard Windsor Fund on November 28, 2024 and sell it today you would lose (128.00) from holding Vanguard Windsor Fund or give up 1.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Vanguard Windsor Fund
Performance |
| Timeline |
| Bank of America |
| Vanguard Windsor |
Bank of America and Vanguard Windsor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Vanguard Windsor
The main advantage of trading using opposite Bank of America and Vanguard Windsor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Vanguard Windsor 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 Windsor will offset losses from the drop in Vanguard Windsor'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 |
| Vanguard Windsor vs. Intal High Relative | Vanguard Windsor vs. Access Flex High | Vanguard Windsor vs. Gmo High Yield | Vanguard Windsor vs. Mesirow Financial High |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |