Correlation Between Bank of America and Atlanticus Holdings
Can any of the company-specific risk be diversified away by investing in both Bank of America and Atlanticus Holdings 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 Atlanticus Holdings 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 Atlanticus Holdings, you can compare the effects of market volatilities on Bank of America and Atlanticus Holdings 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 Atlanticus Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Atlanticus Holdings.
Diversification Opportunities for Bank of America and Atlanticus Holdings
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Atlanticus is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Atlanticus Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlanticus Holdings 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 Atlanticus Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlanticus Holdings has no effect on the direction of Bank of America i.e., Bank of America and Atlanticus Holdings go up and down completely randomly.
Pair Corralation between Bank of America and Atlanticus Holdings
Assuming the 90 days trading horizon Bank of America is expected to generate 0.8 times more return on investment than Atlanticus Holdings. However, Bank of America is 1.24 times less risky than Atlanticus Holdings. It trades about 0.11 of its potential returns per unit of risk. Atlanticus Holdings is currently generating about 0.07 per unit of risk. If you would invest 2,127 in Bank of America on August 31, 2024 and sell it today you would earn a total of 179.00 from holding Bank of America or generate 8.42% 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. Atlanticus Holdings
Performance |
| Timeline |
| Bank of America |
| Atlanticus Holdings |
Bank of America and Atlanticus Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Atlanticus Holdings
The main advantage of trading using opposite Bank of America and Atlanticus Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Atlanticus Holdings 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 Atlanticus Holdings will offset losses from the drop in Atlanticus Holdings' long position.| Bank of America vs. China Construction Bank | Bank of America vs. Bank of America | Bank of America vs. Wells Fargo | Bank of America vs. Bank of America |
| Atlanticus Holdings vs. B Riley Financial | Atlanticus Holdings vs. Atlanticus Holdings Corp | Atlanticus Holdings vs. Atlas Corp | Atlanticus Holdings vs. Harrow Health 8625 |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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