Correlation Between Bank of America and Adler Value
Can any of the company-specific risk be diversified away by investing in both Bank of America and Adler Value 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 Adler Value 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 Adler Value Fund, you can compare the effects of market volatilities on Bank of America and Adler Value 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 Adler Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Adler Value.
Diversification Opportunities for Bank of America and Adler Value
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Adler is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Adler Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adler Value Fund 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 Adler Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adler Value Fund has no effect on the direction of Bank of America i.e., Bank of America and Adler Value go up and down completely randomly.
Pair Corralation between Bank of America and Adler Value
Considering the 90-day investment horizon Bank of America is expected to under-perform the Adler Value. In addition to that, Bank of America is 1.64 times more volatile than Adler Value Fund. It trades about -0.01 of its total potential returns per unit of risk. Adler Value Fund is currently generating about -0.02 per unit of volatility. If you would invest 2,897 in Adler Value Fund on December 1, 2024 and sell it today you would lose (30.00) from holding Adler Value Fund or give up 1.04% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Bank of America vs. Adler Value Fund
Performance |
Timeline |
Bank of America |
Adler Value Fund |
Bank of America and Adler Value Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and Adler Value
The main advantage of trading using opposite Bank of America and Adler Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Adler Value 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 Adler Value will offset losses from the drop in Adler Value's long position.Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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