Correlation Between Bank of America and LifeGoal Investments

Can any of the company-specific risk be diversified away by investing in both Bank of America and LifeGoal Investments 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 LifeGoal Investments 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 LifeGoal Investments, you can compare the effects of market volatilities on Bank of America and LifeGoal Investments 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 LifeGoal Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and LifeGoal Investments.

Diversification Opportunities for Bank of America and LifeGoal Investments

0.0

Correlation Coefficient

Bank of America  LifeGoal Investments

Pay attention - limited upside

The 3 months correlation between Bank and LifeGoal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and LifeGoal Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LifeGoal Investments 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 LifeGoal Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LifeGoal Investments has no effect on the direction of Bank of America i.e., Bank of America and LifeGoal Investments go up and down completely randomly.

Pair Corralation between Bank of America and LifeGoal Investments

If you would invest (100.00) in LifeGoal Investments on December 25, 2024 and sell it today you would earn a total of  100.00  from holding LifeGoal Investments or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Bank of America  vs.  LifeGoal Investments

Bank of America

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of America has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bank of America is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

LifeGoal Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days LifeGoal Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, LifeGoal Investments is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bank of America and LifeGoal Investments

The main advantage of trading using opposite Bank of America and LifeGoal Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, LifeGoal Investments 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 LifeGoal Investments will offset losses from the drop in LifeGoal Investments' long position.

The idea behind Bank of America and LifeGoal Investments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.