Correlation Between Bank of America and WSFS Financial
Can any of the company-specific risk be diversified away by investing in both Bank of America and WSFS Financial 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 WSFS Financial 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 WSFS Financial, you can compare the effects of market volatilities on Bank of America and WSFS Financial 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 WSFS Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and WSFS Financial.
Diversification Opportunities for Bank of America and WSFS Financial
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and WSFS is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and WSFS Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WSFS Financial 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 WSFS Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WSFS Financial has no effect on the direction of Bank of America i.e., Bank of America and WSFS Financial go up and down completely randomly.
Pair Corralation between Bank of America and WSFS Financial
Considering the 90-day investment horizon Bank of America is expected to generate 0.8 times more return on investment than WSFS Financial. However, Bank of America is 1.25 times less risky than WSFS Financial. It trades about 0.29 of its potential returns per unit of risk. WSFS Financial is currently generating about 0.15 per unit of risk. If you would invest 3,852 in Bank of America on April 23, 2025 and sell it today you would earn a total of 896.00 from holding Bank of America or generate 23.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Bank of America vs. WSFS Financial
Performance |
Timeline |
Bank of America |
WSFS Financial |
Bank of America and WSFS Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and WSFS Financial
The main advantage of trading using opposite Bank of America and WSFS Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, WSFS Financial 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 WSFS Financial will offset losses from the drop in WSFS Financial's long position.Bank of America vs. JPMorgan Chase Co | Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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