Correlation Between One Choice and B of A

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Can any of the company-specific risk be diversified away by investing in both One Choice and B of A 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 One Choice and B of A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between One Choice Blend and Bank Of America, you can compare the effects of market volatilities on One Choice and B of A 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 One Choice with a short position of B of A. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Choice and B of A.

Diversification Opportunities for One Choice and B of A

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between AAAHX and B of A is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding One Choice Blend and Bank Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Of America and One Choice 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 One Choice Blend are associated (or correlated) with B of A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Of America has no effect on the direction of One Choice i.e., One Choice and B of A go up and down completely randomly.

Pair Corralation between One Choice and B of A

Assuming the 90 days horizon One Choice Blend is expected to under-perform the B of A. But the mutual fund apears to be less risky and, when comparing its historical volatility, One Choice Blend is 3.23 times less risky than B of A. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Bank Of America is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,191  in Bank Of America on September 1, 2022 and sell it today you would earn a total of  594.00  from holding Bank Of America or generate 18.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.41%
ValuesDaily Returns

One Choice Blend  vs.  Bank Of America

 Performance (%) 
       Timeline  
One Choice Blend 
AAAHX Performance
0 of 100
Over the last 90 days One Choice Blend has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, One Choice is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AAAHX Price Channel

Bank Of America 
B of A Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bank Of America are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, B of A sustained solid returns over the last few months and may actually be approaching a breakup point.

B of A Price Channel

One Choice and B of A Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with One Choice and B of A

The main advantage of trading using opposite One Choice and B of A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One Choice position performs unexpectedly, B of A 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 B of A will offset losses from the drop in B of A's long position.
One Choice vs. BlackRock International I
The idea behind One Choice Blend and Bank Of America 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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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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