Correlation Between Bank of America and SSgA SPDR
Can any of the company-specific risk be diversified away by investing in both Bank of America and SSgA SPDR 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 SSgA SPDR 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 SSgA SPDR ETFs, you can compare the effects of market volatilities on Bank of America and SSgA SPDR 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 SSgA SPDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and SSgA SPDR.
Diversification Opportunities for Bank of America and SSgA SPDR
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and SSgA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs 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 SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of Bank of America i.e., Bank of America and SSgA SPDR go up and down completely randomly.
Pair Corralation between Bank of America and SSgA SPDR
Considering the 90-day investment horizon Bank of America is expected to generate 2.31 times more return on investment than SSgA SPDR. However, Bank of America is 2.31 times more volatile than SSgA SPDR ETFs. It trades about 0.22 of its potential returns per unit of risk. SSgA SPDR ETFs is currently generating about -0.13 per unit of risk. If you would invest 4,265 in Bank of America on August 25, 2024 and sell it today you would earn a total of 435.00 from holding Bank of America or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. SSgA SPDR ETFs
Performance |
| Timeline |
| Bank of America |
| SSgA SPDR ETFs |
Bank of America and SSgA SPDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and SSgA SPDR
The main advantage of trading using opposite Bank of America and SSgA SPDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, SSgA SPDR 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 SSgA SPDR will offset losses from the drop in SSgA SPDR's long position.| Bank of America vs. Amtech Systems | Bank of America vs. Gold Fields Ltd | Bank of America vs. Aegean Airlines SA | Bank of America vs. Merck Company |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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