Correlation Between Bank of America and VanEck CEF
Can any of the company-specific risk be diversified away by investing in both Bank of America and VanEck CEF 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 VanEck CEF 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 VanEck CEF Municipal, you can compare the effects of market volatilities on Bank of America and VanEck CEF 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 VanEck CEF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and VanEck CEF.
Diversification Opportunities for Bank of America and VanEck CEF
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and VanEck is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and VanEck CEF Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck CEF Municipal 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 VanEck CEF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck CEF Municipal has no effect on the direction of Bank of America i.e., Bank of America and VanEck CEF go up and down completely randomly.
Pair Corralation between Bank of America and VanEck CEF
Considering the 90-day investment horizon Bank of America is expected to generate 3.72 times more return on investment than VanEck CEF. However, Bank of America is 3.72 times more volatile than VanEck CEF Municipal. It trades about 0.22 of its potential returns per unit of risk. VanEck CEF Municipal is currently generating about 0.05 per unit of risk. If you would invest 4,265 in Bank of America on August 25, 2024 and sell it today you would earn a total of 435.00 from holding Bank of America or generate 10.2% 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. VanEck CEF Municipal
Performance |
| Timeline |
| Bank of America |
| VanEck CEF Municipal |
Bank of America and VanEck CEF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and VanEck CEF
The main advantage of trading using opposite Bank of America and VanEck CEF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, VanEck CEF 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 VanEck CEF will offset losses from the drop in VanEck CEF'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 |
| VanEck CEF vs. SPDR Nuveen Bloomberg | VanEck CEF vs. VanEck High Yield | VanEck CEF vs. VanEck Short Muni | VanEck CEF vs. VanEck Long Muni |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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