Correlation Between Bank of America and Horizon Kinetics
Can any of the company-specific risk be diversified away by investing in both Bank of America and Horizon Kinetics 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 Horizon Kinetics 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 Horizon Kinetics Medical, you can compare the effects of market volatilities on Bank of America and Horizon Kinetics 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 Horizon Kinetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Horizon Kinetics.
Diversification Opportunities for Bank of America and Horizon Kinetics
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and Horizon is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Horizon Kinetics Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Kinetics Medical 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 Horizon Kinetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Kinetics Medical has no effect on the direction of Bank of America i.e., Bank of America and Horizon Kinetics go up and down completely randomly.
Pair Corralation between Bank of America and Horizon Kinetics
Considering the 90-day investment horizon Bank of America is expected to generate 1.8 times more return on investment than Horizon Kinetics. However, Bank of America is 1.8 times more volatile than Horizon Kinetics Medical. It trades about 0.12 of its potential returns per unit of risk. Horizon Kinetics Medical is currently generating about 0.03 per unit of risk. If you would invest 3,547 in Bank of America on March 14, 2024 and sell it today you would earn a total of 339.00 from holding Bank of America or generate 9.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.41% |
Values | Daily Returns |
Bank of America vs. Horizon Kinetics Medical
Performance |
Timeline |
Bank of America |
Horizon Kinetics Medical |
Bank of America and Horizon Kinetics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and Horizon Kinetics
The main advantage of trading using opposite Bank of America and Horizon Kinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Horizon Kinetics 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 Horizon Kinetics will offset losses from the drop in Horizon Kinetics' 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 |
Horizon Kinetics vs. Vanguard Total Stock | Horizon Kinetics vs. SPDR SP 500 | Horizon Kinetics vs. iShares Core SP | Horizon Kinetics vs. Vanguard Total Bond |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Equity Valuation Check real value of public entities based on technical and fundamental data |