Correlation Between Bank of America and Wilmington New
Can any of the company-specific risk be diversified away by investing in both Bank of America and Wilmington New 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 Wilmington New 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 Wilmington New York, you can compare the effects of market volatilities on Bank of America and Wilmington New 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 Wilmington New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Wilmington New.
Diversification Opportunities for Bank of America and Wilmington New
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and WILMINGTON is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Wilmington New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington New York 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 Wilmington New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington New York has no effect on the direction of Bank of America i.e., Bank of America and Wilmington New go up and down completely randomly.
Pair Corralation between Bank of America and Wilmington New
Considering the 90-day investment horizon Bank of America is expected to generate 8.01 times more return on investment than Wilmington New. However, Bank of America is 8.01 times more volatile than Wilmington New York. It trades about 0.13 of its potential returns per unit of risk. Wilmington New York is currently generating about 0.07 per unit of risk. If you would invest 2,949 in Bank of America on August 25, 2024 and sell it today you would earn a total of 1,751 from holding Bank of America or generate 59.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Wilmington New York
Performance |
| Timeline |
| Bank of America |
| Wilmington New York |
Bank of America and Wilmington New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Wilmington New
The main advantage of trading using opposite Bank of America and Wilmington New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Wilmington New 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 Wilmington New will offset losses from the drop in Wilmington New's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Wilmington New vs. Ab Global Risk | Wilmington New vs. Artisan High Income | Wilmington New vs. Western Asset High | Wilmington New vs. Morningstar Aggressive Growth |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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