Correlation Between Bank of America and PRIME
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By analyzing existing cross correlation between Bank of America and PRIME SEC SVCS, you can compare the effects of market volatilities on Bank of America and PRIME 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 PRIME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and PRIME.
Diversification Opportunities for Bank of America and PRIME
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and PRIME is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and PRIME SEC SVCS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRIME SEC SVCS 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 PRIME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRIME SEC SVCS has no effect on the direction of Bank of America i.e., Bank of America and PRIME go up and down completely randomly.
Pair Corralation between Bank of America and PRIME
Considering the 90-day investment horizon Bank of America is expected to generate 19.94 times less return on investment than PRIME. But when comparing it to its historical volatility, Bank of America is 29.75 times less risky than PRIME. It trades about 0.06 of its potential returns per unit of risk. PRIME SEC SVCS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,042 in PRIME SEC SVCS on September 3, 2024 and sell it today you would earn a total of 416.00 from holding PRIME SEC SVCS or generate 4.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.14% |
| Values | Daily Returns |
Bank of America vs. PRIME SEC SVCS
Performance |
| Timeline |
| Bank of America |
| PRIME SEC SVCS |
Bank of America and PRIME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and PRIME
The main advantage of trading using opposite Bank of America and PRIME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, PRIME 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 PRIME will offset losses from the drop in PRIME's long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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