Correlation Between Bank of America and SOUTHERN
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By analyzing existing cross correlation between Bank of America and SOUTHERN CALIF EDISON, you can compare the effects of market volatilities on Bank of America and SOUTHERN 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 SOUTHERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and SOUTHERN.
Diversification Opportunities for Bank of America and SOUTHERN
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and SOUTHERN is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and SOUTHERN CALIF EDISON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN CALIF EDISON 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 SOUTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHERN CALIF EDISON has no effect on the direction of Bank of America i.e., Bank of America and SOUTHERN go up and down completely randomly.
Pair Corralation between Bank of America and SOUTHERN
Considering the 90-day investment horizon Bank of America is expected to generate 0.82 times more return on investment than SOUTHERN. However, Bank of America is 1.22 times less risky than SOUTHERN. It trades about 0.14 of its potential returns per unit of risk. SOUTHERN CALIF EDISON is currently generating about -0.14 per unit of risk. If you would invest 4,438 in Bank of America on October 25, 2024 and sell it today you would earn a total of 141.00 from holding Bank of America or generate 3.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 78.95% |
| Values | Daily Returns |
Bank of America vs. SOUTHERN CALIF EDISON
Performance |
| Timeline |
| Bank of America |
| SOUTHERN CALIF EDISON |
Bank of America and SOUTHERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and SOUTHERN
The main advantage of trading using opposite Bank of America and SOUTHERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, SOUTHERN 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 SOUTHERN will offset losses from the drop in SOUTHERN's long position.| Bank of America vs. JPMorgan Chase Co | Bank of America vs. Bank of America | Bank of America vs. RLJ Lodging Trust | Bank of America vs. PennyMac Finl Svcs |
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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