Correlation Between Bank of America and SVB Financial
Can any of the company-specific risk be diversified away by investing in both Bank of America and SVB Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bank of America and SVB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and SVB Financial Group, you can compare the effects of market volatilities on Bank of America and SVB Financial 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 SVB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and SVB Financial.
Diversification Opportunities for Bank of America and SVB Financial
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and SVB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and SVB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVB Financial Group 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 SVB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVB Financial Group has no effect on the direction of Bank of America i.e., Bank of America and SVB Financial go up and down completely randomly.
Pair Corralation between Bank of America and SVB Financial
If you would invest 5,291 in Bank of America on September 5, 2024 and sell it today you would earn a total of 1,815 from holding Bank of America or generate 34.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Bank of America vs. SVB Financial Group
Performance |
| Timeline |
| Bank of America |
| SVB Financial Group |
Bank of America and SVB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and SVB Financial
The main advantage of trading using opposite Bank of America and SVB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, SVB Financial 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 SVB Financial will offset losses from the drop in SVB Financial's long position.| Bank of America vs. Citigroup | Bank of America vs. Fundo Investimento Imobiliario | Bank of America vs. Fras le SA | Bank of America vs. Western Digital |
| SVB Financial vs. Charter Communications | SVB Financial vs. Unifique Telecomunicaes SA | SVB Financial vs. G2D Investments | SVB Financial vs. Apartment Investment and |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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