Correlation Between Bank of America and SGF Capital
Can any of the company-specific risk be diversified away by investing in both Bank of America and SGF Capital 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 SGF Capital 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 SGF Capital Public, you can compare the effects of market volatilities on Bank of America and SGF Capital 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 SGF Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and SGF Capital.
Diversification Opportunities for Bank of America and SGF Capital
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and SGF is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and SGF Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGF Capital Public 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 SGF Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGF Capital Public has no effect on the direction of Bank of America i.e., Bank of America and SGF Capital go up and down completely randomly.
Pair Corralation between Bank of America and SGF Capital
Considering the 90-day investment horizon Bank of America is expected to generate 52.46 times less return on investment than SGF Capital. But when comparing it to its historical volatility, Bank of America is 78.14 times less risky than SGF Capital. It trades about 0.16 of its potential returns per unit of risk. SGF Capital Public is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 28.00 in SGF Capital Public on September 2, 2024 and sell it today you would lose (3.00) from holding SGF Capital Public or give up 10.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. SGF Capital Public
Performance |
| Timeline |
| Bank of America |
| SGF Capital Public |
Bank of America and SGF Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and SGF Capital
The main advantage of trading using opposite Bank of America and SGF Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, SGF Capital 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 SGF Capital will offset losses from the drop in SGF Capital's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
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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 the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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