Correlation Between Bank of America and VanEck CMCI
Can any of the company-specific risk be diversified away by investing in both Bank of America and VanEck CMCI 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 VanEck CMCI 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 VanEck CMCI Commodity, you can compare the effects of market volatilities on Bank of America and VanEck CMCI 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 VanEck CMCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and VanEck CMCI.
Diversification Opportunities for Bank of America and VanEck CMCI
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and VanEck is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and VanEck CMCI Commodity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck CMCI Commodity 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 VanEck CMCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck CMCI Commodity has no effect on the direction of Bank of America i.e., Bank of America and VanEck CMCI go up and down completely randomly.
Pair Corralation between Bank of America and VanEck CMCI
Considering the 90-day investment horizon Bank of America is expected to under-perform the VanEck CMCI. In addition to that, Bank of America is 1.15 times more volatile than VanEck CMCI Commodity. It trades about -0.01 of its total potential returns per unit of risk. VanEck CMCI Commodity is currently generating about 0.06 per unit of volatility. If you would invest 2,414 in VanEck CMCI Commodity on December 1, 2024 and sell it today you would earn a total of 82.00 from holding VanEck CMCI Commodity or generate 3.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Bank of America vs. VanEck CMCI Commodity
Performance |
Timeline |
Bank of America |
VanEck CMCI Commodity |
Bank of America and VanEck CMCI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and VanEck CMCI
The main advantage of trading using opposite Bank of America and VanEck CMCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, VanEck CMCI 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 VanEck CMCI will offset losses from the drop in VanEck CMCI'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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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