Correlation Between Bank of America and Lake Materials
Can any of the company-specific risk be diversified away by investing in both Bank of America and Lake Materials 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 Lake Materials 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 Lake Materials Co, you can compare the effects of market volatilities on Bank of America and Lake Materials 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 Lake Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Lake Materials.
Diversification Opportunities for Bank of America and Lake Materials
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Lake is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Lake Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Materials 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 Lake Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Materials has no effect on the direction of Bank of America i.e., Bank of America and Lake Materials go up and down completely randomly.
Pair Corralation between Bank of America and Lake Materials
Considering the 90-day investment horizon Bank of America is expected to generate 0.34 times more return on investment than Lake Materials. However, Bank of America is 2.94 times less risky than Lake Materials. It trades about -0.03 of its potential returns per unit of risk. Lake Materials Co is currently generating about -0.04 per unit of risk. If you would invest 4,724 in Bank of America on October 26, 2024 and sell it today you would lose (72.00) from holding Bank of America or give up 1.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.56% |
| Values | Daily Returns |
Bank of America vs. Lake Materials Co
Performance |
| Timeline |
| Bank of America |
| Lake Materials |
Bank of America and Lake Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Lake Materials
The main advantage of trading using opposite Bank of America and Lake Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Lake Materials 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 Lake Materials will offset losses from the drop in Lake Materials' long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC |
| Lake Materials vs. Sempio Foods Co | Lake Materials vs. Youngbo Chemical Co | Lake Materials vs. Daejung Chemicals Metals | Lake Materials vs. KPX Green Chemical |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |