Correlation Between Bank of America and Jupiter Fund
Can any of the company-specific risk be diversified away by investing in both Bank of America and Jupiter Fund 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 Jupiter Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Jupiter Fund Management, you can compare the effects of market volatilities on Bank of America and Jupiter Fund 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 Jupiter Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Jupiter Fund.
Diversification Opportunities for Bank of America and Jupiter Fund
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Jupiter is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Jupiter Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jupiter Fund Management 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 Verizon Communications are associated (or correlated) with Jupiter Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jupiter Fund Management has no effect on the direction of Bank of America i.e., Bank of America and Jupiter Fund go up and down completely randomly.
Pair Corralation between Bank of America and Jupiter Fund
Assuming the 90 days trading horizon Verizon Communications is expected to generate 0.43 times more return on investment than Jupiter Fund. However, Verizon Communications is 2.34 times less risky than Jupiter Fund. It trades about -0.15 of its potential returns per unit of risk. Jupiter Fund Management is currently generating about -0.1 per unit of risk. If you would invest 3,861 in Verizon Communications on February 2, 2024 and sell it today you would lose (164.00) from holding Verizon Communications or give up 4.25% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Verizon Communications vs. Jupiter Fund Management
Performance |
Timeline |
Verizon Communications |
Jupiter Fund Management |
Bank of America and Jupiter Fund Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and Jupiter Fund
The main advantage of trading using opposite Bank of America and Jupiter Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Jupiter Fund 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 Jupiter Fund will offset losses from the drop in Jupiter Fund's long position.Bank of America vs. SEI INVESTMENTS | Bank of America vs. New Residential Investment | Bank of America vs. PennantPark Investment | Bank of America vs. Cal Maine Foods |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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