Correlation Between Bank of America and Everyday People
Can any of the company-specific risk be diversified away by investing in both Bank of America and Everyday People 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 Everyday People 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 Everyday People Financial, you can compare the effects of market volatilities on Bank of America and Everyday People 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 Everyday People. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Everyday People.
Diversification Opportunities for Bank of America and Everyday People
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Everyday is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Everyday People Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everyday People Financial 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 Everyday People. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everyday People Financial has no effect on the direction of Bank of America i.e., Bank of America and Everyday People go up and down completely randomly.
Pair Corralation between Bank of America and Everyday People
Assuming the 90 days trading horizon Bank of America is expected to generate 16.32 times less return on investment than Everyday People. But when comparing it to its historical volatility, Bank of America is 3.55 times less risky than Everyday People. It trades about 0.04 of its potential returns per unit of risk. Everyday People Financial is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 39.00 in Everyday People Financial on September 13, 2024 and sell it today you would earn a total of 5.00 from holding Everyday People Financial or generate 12.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bank of America vs. Everyday People Financial
Performance |
| Timeline |
| Bank of America |
| Everyday People Financial |
Bank of America and Everyday People Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Everyday People
The main advantage of trading using opposite Bank of America and Everyday People positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Everyday People 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 Everyday People will offset losses from the drop in Everyday People's long position.| Bank of America vs. CNJ Capital Investments | Bank of America vs. Bird Construction | Bank of America vs. Cogeco Communications | Bank of America vs. Brookfield Office Properties |
| Everyday People vs. Berkshire Hathaway CDR | Everyday People vs. JPMorgan Chase Co | Everyday People vs. Bank of America | Everyday People vs. Alphabet Inc CDR |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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