Correlation Between B of A and REAL ESTATE

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both B of A and REAL ESTATE 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 B of A and REAL ESTATE 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 REAL ESTATE FUND, you can compare the effects of market volatilities on B of A and REAL ESTATE 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 B of A with a short position of REAL ESTATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of B of A and REAL ESTATE.

Diversification Opportunities for B of A and REAL ESTATE

0.37
  Correlation Coefficient

Weak diversification

The 3 months correlation between B of A and ARREX is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of America and REAL ESTATE FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REAL ESTATE FUND and B of A 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 REAL ESTATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REAL ESTATE FUND has no effect on the direction of B of A i.e., B of A and REAL ESTATE go up and down completely randomly.

Pair Corralation between B of A and REAL ESTATE

Considering the 90-day investment horizon Bank Of America is expected to under-perform the REAL ESTATE. But the stock apears to be less risky and, when comparing its historical volatility, Bank Of America is 1.01 times less risky than REAL ESTATE. The stock trades about -0.29 of its potential returns per unit of risk. The REAL ESTATE FUND is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,455  in REAL ESTATE FUND on September 9, 2022 and sell it today you would earn a total of  113.00  from holding REAL ESTATE FUND or generate 4.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Bank Of America  vs.  REAL ESTATE FUND

 Performance (%) 
       Timeline  
Bank Of America 
B of A Performance
0 of 100
Over the last 90 days Bank Of America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, B of A is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

B of A Price Channel

REAL ESTATE FUND 
ARREX Performance
0 of 100
Over the last 90 days REAL ESTATE FUND has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest uncertain performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

ARREX Price Channel

B of A and REAL ESTATE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with B of A and REAL ESTATE

The main advantage of trading using opposite B of A and REAL ESTATE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B of A position performs unexpectedly, REAL ESTATE 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 REAL ESTATE will offset losses from the drop in REAL ESTATE's long position.
B of A vs. JPMorgan Chase Co
B of A vs. Home Depot
B of A vs. General Electric
B of A vs. International Business Machines
The idea behind Bank Of America and REAL ESTATE FUND 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.
REAL ESTATE vs. Walmart
REAL ESTATE vs. Weiqiao Textile
REAL ESTATE vs. SECOM LTD
REAL ESTATE vs. AMERICAN FUNDS 2060
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

Other Complementary Tools

Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Go
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go