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
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and SOUTHERN is -0.37. 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 31.94 times less return on investment than SOUTHERN. But when comparing it to its historical volatility, Bank of America is 37.65 times less risky than SOUTHERN. It trades about 0.06 of its potential returns per unit of risk. SOUTHERN CALIF EDISON is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10,374 in SOUTHERN CALIF EDISON on September 3, 2024 and sell it today you would earn a total of 277.00 from holding SOUTHERN CALIF EDISON or generate 2.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 58.79% |
| 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. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| SOUTHERN vs. Nextnav Acquisition Corp | SOUTHERN vs. Playtika Holding Corp | SOUTHERN vs. KVH Industries | SOUTHERN vs. Allient |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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