Correlation Between Bank of America and Avient Corp
Can any of the company-specific risk be diversified away by investing in both Bank of America and Avient Corp 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 Avient Corp 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 Avient Corp, you can compare the effects of market volatilities on Bank of America and Avient Corp 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 Avient Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Avient Corp.
Diversification Opportunities for Bank of America and Avient Corp
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Avient is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp 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 Avient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avient Corp has no effect on the direction of Bank of America i.e., Bank of America and Avient Corp go up and down completely randomly.
Pair Corralation between Bank of America and Avient Corp
Assuming the 90 days trading horizon Bank of America is expected to generate 5.89 times less return on investment than Avient Corp. But when comparing it to its historical volatility, Bank of America is 2.64 times less risky than Avient Corp. It trades about 0.11 of its potential returns per unit of risk. Avient Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,661 in Avient Corp on September 1, 2024 and sell it today you would earn a total of 464.00 from holding Avient Corp or generate 9.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Avient Corp
Performance |
| Timeline |
| Bank of America |
| Avient Corp |
Bank of America and Avient Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Avient Corp
The main advantage of trading using opposite Bank of America and Avient Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Avient Corp 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 Avient Corp will offset losses from the drop in Avient Corp'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 |
| Avient Corp vs. Axalta Coating Systems | Avient Corp vs. H B Fuller | Avient Corp vs. Quaker Chemical | Avient Corp vs. Cabot |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |