Correlation Between Bank of America and ARB
Can any of the company-specific risk be diversified away by investing in both Bank of America and ARB 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 ARB 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 ARB Limited, you can compare the effects of market volatilities on Bank of America and ARB 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 ARB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and ARB.
Diversification Opportunities for Bank of America and ARB
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and ARB is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and ARB Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARB Limited 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 ARB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARB Limited has no effect on the direction of Bank of America i.e., Bank of America and ARB go up and down completely randomly.
Pair Corralation between Bank of America and ARB
If you would invest 2,261 in Bank of America on September 2, 2024 and sell it today you would earn a total of 37.00 from holding Bank of America or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Bank of America vs. ARB Limited
Performance |
| Timeline |
| Bank of America |
| ARB Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and ARB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and ARB
The main advantage of trading using opposite Bank of America and ARB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, ARB 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 ARB will offset losses from the drop in ARB's long position.| Bank of America vs. Bank of America | Bank of America vs. Bank of America | Bank of America vs. China Construction Bank | Bank of America vs. Bank of America |
| ARB vs. Bank of America | ARB vs. Skillful Craftsman Education | ARB vs. Old Dominion Freight | ARB vs. PennantPark Investment |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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