Correlation Between Bank of America and Lonza Group
Can any of the company-specific risk be diversified away by investing in both Bank of America and Lonza Group 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 Lonza Group 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 Lonza Group AG, you can compare the effects of market volatilities on Bank of America and Lonza Group 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 Lonza Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Lonza Group.
Diversification Opportunities for Bank of America and Lonza Group
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Lonza is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Lonza Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group AG 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 Lonza Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lonza Group AG has no effect on the direction of Bank of America i.e., Bank of America and Lonza Group go up and down completely randomly.
Pair Corralation between Bank of America and Lonza Group
Considering the 90-day investment horizon Bank of America is expected to generate 0.94 times more return on investment than Lonza Group. However, Bank of America is 1.06 times less risky than Lonza Group. It trades about 0.31 of its potential returns per unit of risk. Lonza Group AG is currently generating about -0.01 per unit of risk. If you would invest 4,182 in Bank of America on September 1, 2024 and sell it today you would earn a total of 569.00 from holding Bank of America or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Bank of America vs. Lonza Group AG
Performance |
| Timeline |
| Bank of America |
| Lonza Group AG |
Bank of America and Lonza Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Lonza Group
The main advantage of trading using opposite Bank of America and Lonza Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Lonza Group 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 Lonza Group will offset losses from the drop in Lonza Group's long position.| Bank of America vs. Citigroup | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings |
| Lonza Group vs. Sika AG | Lonza Group vs. Givaudan SA | Lonza Group vs. Geberit AG | Lonza Group vs. Swiss Life Holding |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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