Correlation Between Bank of America and SOUTHWEST
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By analyzing existing cross correlation between Bank of America and SOUTHWEST AIRLS 345, you can compare the effects of market volatilities on Bank of America and SOUTHWEST 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 SOUTHWEST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and SOUTHWEST.
Diversification Opportunities for Bank of America and SOUTHWEST
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and SOUTHWEST is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and SOUTHWEST AIRLS 345 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHWEST AIRLS 345 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 SOUTHWEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHWEST AIRLS 345 has no effect on the direction of Bank of America i.e., Bank of America and SOUTHWEST go up and down completely randomly.
Pair Corralation between Bank of America and SOUTHWEST
Considering the 90-day investment horizon Bank of America is expected to generate 1.92 times more return on investment than SOUTHWEST. However, Bank of America is 1.92 times more volatile than SOUTHWEST AIRLS 345. It trades about 0.1 of its potential returns per unit of risk. SOUTHWEST AIRLS 345 is currently generating about 0.01 per unit of risk. If you would invest 2,820 in Bank of America on August 31, 2024 and sell it today you would earn a total of 1,931 from holding Bank of America or generate 68.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.92% |
| Values | Daily Returns |
Bank of America vs. SOUTHWEST AIRLS 345
Performance |
| Timeline |
| Bank of America |
| SOUTHWEST AIRLS 345 |
Bank of America and SOUTHWEST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and SOUTHWEST
The main advantage of trading using opposite Bank of America and SOUTHWEST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, SOUTHWEST 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 SOUTHWEST will offset losses from the drop in SOUTHWEST's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| SOUTHWEST vs. AEP TEX INC | SOUTHWEST vs. US BANK NATIONAL | SOUTHWEST vs. Bank of America | SOUTHWEST vs. GE Aerospace |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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