Correlation Between Bank of America and Wisdomtree Digital
Can any of the company-specific risk be diversified away by investing in both Bank of America and Wisdomtree Digital 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 Wisdomtree Digital 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 Wisdomtree Digital Trust, you can compare the effects of market volatilities on Bank of America and Wisdomtree Digital 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 Wisdomtree Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Wisdomtree Digital.
Diversification Opportunities for Bank of America and Wisdomtree Digital
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Wisdomtree is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Wisdomtree Digital Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wisdomtree Digital Trust 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 Wisdomtree Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wisdomtree Digital Trust has no effect on the direction of Bank of America i.e., Bank of America and Wisdomtree Digital go up and down completely randomly.
Pair Corralation between Bank of America and Wisdomtree Digital
Considering the 90-day investment horizon Bank of America is expected to generate 4.51 times more return on investment than Wisdomtree Digital. However, Bank of America is 4.51 times more volatile than Wisdomtree Digital Trust. It trades about 0.25 of its potential returns per unit of risk. Wisdomtree Digital Trust is currently generating about -0.25 per unit of risk. If you would invest 3,925 in Bank of America on August 26, 2024 and sell it today you would earn a total of 775.00 from holding Bank of America or generate 19.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Wisdomtree Digital Trust
Performance |
| Timeline |
| Bank of America |
| Wisdomtree Digital Trust |
Bank of America and Wisdomtree Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Wisdomtree Digital
The main advantage of trading using opposite Bank of America and Wisdomtree Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Wisdomtree Digital 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 Wisdomtree Digital will offset losses from the drop in Wisdomtree Digital'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 |
| Wisdomtree Digital vs. Wisdomtree Digital Trust | Wisdomtree Digital vs. Wisdomtree Digital Trust | Wisdomtree Digital vs. Wisdomtree Digital Trust | Wisdomtree Digital vs. Wisdomtree Digital Trust |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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