Correlation Between Bank of America and Sun Max
Can any of the company-specific risk be diversified away by investing in both Bank of America and Sun Max 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 Sun Max 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 Sun Max Tech, you can compare the effects of market volatilities on Bank of America and Sun Max 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 Sun Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Sun Max.
Diversification Opportunities for Bank of America and Sun Max
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Sun is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Sun Max Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Max Tech 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 Sun Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Max Tech has no effect on the direction of Bank of America i.e., Bank of America and Sun Max go up and down completely randomly.
Pair Corralation between Bank of America and Sun Max
Considering the 90-day investment horizon Bank of America is expected to generate 0.73 times more return on investment than Sun Max. However, Bank of America is 1.37 times less risky than Sun Max. It trades about 0.11 of its potential returns per unit of risk. Sun Max Tech is currently generating about -0.04 per unit of risk. If you would invest 3,949 in Bank of America on August 29, 2024 and sell it today you would earn a total of 828.00 from holding Bank of America or generate 20.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Sun Max Tech
Performance |
| Timeline |
| Bank of America |
| Sun Max Tech |
Bank of America and Sun Max Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Sun Max
The main advantage of trading using opposite Bank of America and Sun Max positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Sun Max 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 Sun Max will offset losses from the drop in Sun Max's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. JPMorgan Chase Co |
| Sun Max vs. ASRock Inc | Sun Max vs. Ko Ja Cayman | Sun Max vs. Chenbro Micom Co | Sun Max vs. Leadtek Research |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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