Correlation Between Bank of America and Lantheus Holdings
Can any of the company-specific risk be diversified away by investing in both Bank of America and Lantheus Holdings 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 Lantheus Holdings 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 Lantheus Holdings, you can compare the effects of market volatilities on Bank of America and Lantheus Holdings 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 Lantheus Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Lantheus Holdings.
Diversification Opportunities for Bank of America and Lantheus Holdings
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Lantheus is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Lantheus Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lantheus Holdings 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 Lantheus Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lantheus Holdings has no effect on the direction of Bank of America i.e., Bank of America and Lantheus Holdings go up and down completely randomly.
Pair Corralation between Bank of America and Lantheus Holdings
Considering the 90-day investment horizon Bank of America is expected to generate 0.4 times more return on investment than Lantheus Holdings. However, Bank of America is 2.51 times less risky than Lantheus Holdings. It trades about 0.09 of its potential returns per unit of risk. Lantheus Holdings is currently generating about 0.02 per unit of risk. If you would invest 2,737 in Bank of America on August 24, 2024 and sell it today you would earn a total of 1,963 from holding Bank of America or generate 71.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Lantheus Holdings
Performance |
| Timeline |
| Bank of America |
| Lantheus Holdings |
Bank of America and Lantheus Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Lantheus Holdings
The main advantage of trading using opposite Bank of America and Lantheus Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Lantheus Holdings 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 Lantheus Holdings will offset losses from the drop in Lantheus Holdings' 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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