Correlation Between Bank of America and Spectris Plc
Can any of the company-specific risk be diversified away by investing in both Bank of America and Spectris Plc 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 Spectris Plc 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 Spectris plc, you can compare the effects of market volatilities on Bank of America and Spectris Plc 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 Spectris Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Spectris Plc.
Diversification Opportunities for Bank of America and Spectris Plc
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Spectris is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Spectris plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectris plc 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 Spectris Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectris plc has no effect on the direction of Bank of America i.e., Bank of America and Spectris Plc go up and down completely randomly.
Pair Corralation between Bank of America and Spectris Plc
Assuming the 90 days trading horizon Bank of America is expected to generate 0.24 times more return on investment than Spectris Plc. However, Bank of America is 4.2 times less risky than Spectris Plc. It trades about -0.03 of its potential returns per unit of risk. Spectris plc is currently generating about -0.04 per unit of risk. If you would invest 124,998 in Bank of America on August 24, 2024 and sell it today you would lose (794.00) from holding Bank of America or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Spectris plc
Performance |
| Timeline |
| Bank of America |
| Spectris plc |
Bank of America and Spectris Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Spectris Plc
The main advantage of trading using opposite Bank of America and Spectris Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Spectris Plc 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 Spectris Plc will offset losses from the drop in Spectris Plc's long position.| Bank of America vs. Bank of America | Bank of America vs. China Construction Bank | Bank of America vs. Bank of America | Bank of America vs. Wells Fargo |
| Spectris Plc vs. Track Group | Spectris Plc vs. Sono Tek Corp | Spectris Plc vs. Mind Technology | Spectris Plc vs. Electro Sensors |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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