Correlation Between Bank of America and Superior Plus
Can any of the company-specific risk be diversified away by investing in both Bank of America and Superior Plus 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 Superior Plus 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 Superior Plus Corp, you can compare the effects of market volatilities on Bank of America and Superior Plus 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 Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Superior Plus.
Diversification Opportunities for Bank of America and Superior Plus
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Superior is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp 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 Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of Bank of America i.e., Bank of America and Superior Plus go up and down completely randomly.
Pair Corralation between Bank of America and Superior Plus
Assuming the 90 days trading horizon Bank of America is expected to generate 0.41 times more return on investment than Superior Plus. However, Bank of America is 2.45 times less risky than Superior Plus. It trades about 0.29 of its potential returns per unit of risk. Superior Plus Corp is currently generating about 0.01 per unit of risk. If you would invest 2,207 in Bank of America on August 31, 2024 and sell it today you would earn a total of 293.00 from holding Bank of America or generate 13.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Superior Plus Corp
Performance |
| Timeline |
| Bank of America |
| Superior Plus Corp |
Bank of America and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Superior Plus
The main advantage of trading using opposite Bank of America and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| Bank of America vs. Highwood Asset Management | Bank of America vs. Precision Drilling | Bank of America vs. Metalero Mining Corp | Bank of America vs. Brookfield Office Properties |
| Superior Plus vs. Gibson Energy | Superior Plus vs. Parkland Fuel | Superior Plus vs. Mullen Group | Superior Plus vs. Keyera Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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