Correlation Between 06051GKB4 and 00108WAF7
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By analyzing existing cross correlation between BANK OF AMERICA and AEP TEX INC, you can compare the effects of market volatilities on 06051GKB4 and 00108WAF7 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 06051GKB4 with a short position of 00108WAF7. Check out your portfolio center. Please also check ongoing floating volatility patterns of 06051GKB4 and 00108WAF7.
Diversification Opportunities for 06051GKB4 and 00108WAF7
Significant diversification
The 3 months correlation between 06051GKB4 and 00108WAF7 is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding BANK OF AMERICA and AEP TEX INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP TEX INC and 06051GKB4 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 00108WAF7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP TEX INC has no effect on the direction of 06051GKB4 i.e., 06051GKB4 and 00108WAF7 go up and down completely randomly.
Pair Corralation between 06051GKB4 and 00108WAF7
Assuming the 90 days trading horizon BANK OF AMERICA is expected to under-perform the 00108WAF7. But the bond apears to be less risky and, when comparing its historical volatility, BANK OF AMERICA is 123.99 times less risky than 00108WAF7. The bond trades about -0.01 of its potential returns per unit of risk. The AEP TEX INC is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 7,469 in AEP TEX INC on August 31, 2024 and sell it today you would lose (380.00) from holding AEP TEX INC or give up 5.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 67.04% |
| Values | Daily Returns |
BANK OF AMERICA vs. AEP TEX INC
Performance |
| Timeline |
| BANK OF AMERICA |
| AEP TEX INC |
06051GKB4 and 00108WAF7 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 06051GKB4 and 00108WAF7
The main advantage of trading using opposite 06051GKB4 and 00108WAF7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 06051GKB4 position performs unexpectedly, 00108WAF7 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 00108WAF7 will offset losses from the drop in 00108WAF7's long position.| 06051GKB4 vs. AEP TEX INC | 06051GKB4 vs. US BANK NATIONAL | 06051GKB4 vs. American Express | 06051GKB4 vs. Chevron Corp |
| 00108WAF7 vs. Asure Software | 00108WAF7 vs. Casio Computer Co | 00108WAF7 vs. Haverty Furniture Companies | 00108WAF7 vs. SL Green Realty |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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