Correlation Between Bank of America and William Blair
Can any of the company-specific risk be diversified away by investing in both Bank of America and William Blair 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 William Blair 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 William Blair Small Mid, you can compare the effects of market volatilities on Bank of America and William Blair 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 William Blair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and William Blair.
Diversification Opportunities for Bank of America and William Blair
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and William is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and William Blair Small Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair Small 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 William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair Small has no effect on the direction of Bank of America i.e., Bank of America and William Blair go up and down completely randomly.
Pair Corralation between Bank of America and William Blair
Considering the 90-day investment horizon Bank of America is expected to generate 1.35 times more return on investment than William Blair. However, Bank of America is 1.35 times more volatile than William Blair Small Mid. It trades about 0.1 of its potential returns per unit of risk. William Blair Small Mid is currently generating about 0.03 per unit of risk. If you would invest 3,009 in Bank of America on August 26, 2024 and sell it today you would earn a total of 1,691 from holding Bank of America or generate 56.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. William Blair Small Mid
Performance |
| Timeline |
| Bank of America |
| William Blair Small |
Bank of America and William Blair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and William Blair
The main advantage of trading using opposite Bank of America and William Blair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, William Blair 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 William Blair will offset losses from the drop in William Blair'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 |
| William Blair vs. William Blair Small Mid | William Blair vs. American Beacon Bridgeway | William Blair vs. Conestoga Small Cap | William Blair vs. Artisan Developing World |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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