JPM/BAC Banking Pair Strategy

This pair strategy is based on relative valuations and recent price movements of the two stocks.

The long position on BAC is motivated by its lower P/E ratio of 8.40, compared to JPM's P/E ratio of 10.22, suggesting a potential undervaluation of BAC. Additionally, BAC offers a higher dividend yield of 3.15%, which might appeal to income-focused investors. The recent decline in BAC's stock price, from approximately $33.51 to $28.0187, also offers a potential buying opportunity.

Conversely, the short position on JPM is influenced by its higher P/E ratio and recent upward price movement from about $135.12 to $138.96, which could indicate potential relative overvaluation. This strategy would benefit if JPM's stock price were to fall in the future.