Correlation Between Proshares Nanotechnology and B of A

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Can any of the company-specific risk be diversified away by investing in both Proshares Nanotechnology 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 Proshares Nanotechnology 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 Proshares Nanotechnology ETF and Bank Of America, you can compare the effects of market volatilities on Proshares Nanotechnology 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 Proshares Nanotechnology with a short position of B of A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proshares Nanotechnology and B of A.

Diversification Opportunities for Proshares Nanotechnology and B of A

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Proshares and B of A is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Proshares Nanotechnology ETF 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 Proshares Nanotechnology 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 Proshares Nanotechnology ETF 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 Proshares Nanotechnology i.e., Proshares Nanotechnology and B of A go up and down completely randomly.

Pair Corralation between Proshares Nanotechnology and B of A

Given the investment horizon of 90 days Proshares Nanotechnology ETF is expected to generate 1.97 times more return on investment than B of A. However, Proshares Nanotechnology is 1.97 times more volatile than Bank Of America. It trades about 0.25 of its potential returns per unit of risk. Bank Of America is currently generating about 0.18 per unit of risk. If you would invest  2,728  in Proshares Nanotechnology ETF on August 30, 2022 and sell it today you would earn a total of  357.00  from holding Proshares Nanotechnology ETF or generate 13.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Proshares Nanotechnology ETF  vs.  Bank Of America

 Performance (%) 
       Timeline  
Proshares Nanotechnology 
Proshares Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Proshares Nanotechnology ETF are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Proshares Nanotechnology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Proshares 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 weak basic indicators, B of A may actually be approaching a critical reversion point that can send shares even higher in December 2022.

B of A Price Channel

Proshares Nanotechnology and B of A Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Proshares Nanotechnology and B of A

The main advantage of trading using opposite Proshares Nanotechnology and B of A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proshares Nanotechnology 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.
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The idea behind Proshares Nanotechnology ETF 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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