Correlation Between Bank of America and APACHE
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By analyzing existing cross correlation between Bank of America and APACHE P 425, you can compare the effects of market volatilities on Bank of America and APACHE 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 APACHE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and APACHE.
Diversification Opportunities for Bank of America and APACHE
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and APACHE is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and APACHE P 425 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APACHE P 425 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 APACHE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APACHE P 425 has no effect on the direction of Bank of America i.e., Bank of America and APACHE go up and down completely randomly.
Pair Corralation between Bank of America and APACHE
Considering the 90-day investment horizon Bank of America is expected to generate 33.78 times less return on investment than APACHE. But when comparing it to its historical volatility, Bank of America is 37.09 times less risky than APACHE. It trades about 0.06 of its potential returns per unit of risk. APACHE P 425 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,450 in APACHE P 425 on August 28, 2024 and sell it today you would lose (510.00) from holding APACHE P 425 or give up 6.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 61.55% |
| Values | Daily Returns |
Bank of America vs. APACHE P 425
Performance |
| Timeline |
| Bank of America |
| APACHE P 425 |
Bank of America and APACHE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and APACHE
The main advantage of trading using opposite Bank of America and APACHE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, APACHE 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 APACHE will offset losses from the drop in APACHE's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Nova |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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