Correlation Between Bank of America and TCW ETF
Can any of the company-specific risk be diversified away by investing in both Bank of America and TCW ETF 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 TCW ETF 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 TCW ETF Trust, you can compare the effects of market volatilities on Bank of America and TCW ETF 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 TCW ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and TCW ETF.
Diversification Opportunities for Bank of America and TCW ETF
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and TCW is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and TCW ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCW ETF Trust 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 TCW ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCW ETF Trust has no effect on the direction of Bank of America i.e., Bank of America and TCW ETF go up and down completely randomly.
Pair Corralation between Bank of America and TCW ETF
Considering the 90-day investment horizon Bank of America is expected to generate 1.64 times more return on investment than TCW ETF. However, Bank of America is 1.64 times more volatile than TCW ETF Trust. It trades about 0.17 of its potential returns per unit of risk. TCW ETF Trust is currently generating about 0.06 per unit of risk. If you would invest 3,888 in Bank of America on September 14, 2024 and sell it today you would earn a total of 679.00 from holding Bank of America or generate 17.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Bank of America vs. TCW ETF Trust
Performance |
Timeline |
Bank of America |
TCW ETF Trust |
Bank of America and TCW ETF Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and TCW ETF
The main advantage of trading using opposite Bank of America and TCW ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, TCW ETF 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 TCW ETF will offset losses from the drop in TCW ETF'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 |
TCW ETF vs. ProShares Supply Chain | TCW ETF vs. JPMorgan Climate Change | TCW ETF vs. Rbb Fund | TCW ETF vs. Simplify Propel Opportunities |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |