Correlation Between Bank of America and Southstone Minerals
Can any of the company-specific risk be diversified away by investing in both Bank of America and Southstone Minerals 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 Southstone Minerals 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 Southstone Minerals, you can compare the effects of market volatilities on Bank of America and Southstone Minerals 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 Southstone Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Southstone Minerals.
Diversification Opportunities for Bank of America and Southstone Minerals
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Southstone is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Southstone Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southstone Minerals 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 Southstone Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southstone Minerals has no effect on the direction of Bank of America i.e., Bank of America and Southstone Minerals go up and down completely randomly.
Pair Corralation between Bank of America and Southstone Minerals
If you would invest 1.00 in Southstone Minerals on December 1, 2024 and sell it today you would earn a total of 0.00 from holding Southstone Minerals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Southstone Minerals
Performance |
| Timeline |
| Bank of America |
| Southstone Minerals |
Bank of America and Southstone Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Southstone Minerals
The main advantage of trading using opposite Bank of America and Southstone Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Southstone Minerals 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 Southstone Minerals will offset losses from the drop in Southstone Minerals' long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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