Correlation Between Bank of America and Parnassus Core
Can any of the company-specific risk be diversified away by investing in both Bank of America and Parnassus Core 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 Parnassus Core 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 Parnassus Core Select, you can compare the effects of market volatilities on Bank of America and Parnassus Core 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 Parnassus Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Parnassus Core.
Diversification Opportunities for Bank of America and Parnassus Core
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Parnassus is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Parnassus Core Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parnassus Core Select 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 Parnassus Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parnassus Core Select has no effect on the direction of Bank of America i.e., Bank of America and Parnassus Core go up and down completely randomly.
Pair Corralation between Bank of America and Parnassus Core
Considering the 90-day investment horizon Bank of America is expected to generate 1.31 times more return on investment than Parnassus Core. However, Bank of America is 1.31 times more volatile than Parnassus Core Select. It trades about 0.08 of its potential returns per unit of risk. Parnassus Core Select is currently generating about 0.02 per unit of risk. If you would invest 2,791 in Bank of America on June 5, 2025 and sell it today you would earn a total of 2,283 from holding Bank of America or generate 81.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 36.31% |
| Values | Daily Returns |
Bank of America vs. Parnassus Core Select
Performance |
| Timeline |
| Bank of America |
| Parnassus Core Select |
Bank of America and Parnassus Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Parnassus Core
The main advantage of trading using opposite Bank of America and Parnassus Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Parnassus Core 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 Parnassus Core will offset losses from the drop in Parnassus Core's long position.| Bank of America vs. JPMorgan Chase Co | Bank of America vs. Citigroup | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings |
| Parnassus Core vs. Vanguard Total Stock | Parnassus Core vs. SPDR SP 500 | Parnassus Core vs. iShares Core SP | Parnassus Core vs. Vanguard Total Bond |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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