Correlation Between Bank of America and Lighting Science
Can any of the company-specific risk be diversified away by investing in both Bank of America and Lighting Science 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 Lighting Science 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 Lighting Science Group, you can compare the effects of market volatilities on Bank of America and Lighting Science 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 Lighting Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Lighting Science.
Diversification Opportunities for Bank of America and Lighting Science
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Lighting is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Lighting Science Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lighting Science 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 Lighting Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lighting Science has no effect on the direction of Bank of America i.e., Bank of America and Lighting Science go up and down completely randomly.
Pair Corralation between Bank of America and Lighting Science
If you would invest (100.00) in Lighting Science Group on November 28, 2024 and sell it today you would earn a total of 100.00 from holding Lighting Science Group or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Bank of America vs. Lighting Science Group
Performance |
| Timeline |
| Bank of America |
| Lighting Science |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Bank of America and Lighting Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Lighting Science
The main advantage of trading using opposite Bank of America and Lighting Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Lighting Science 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 Lighting Science will offset losses from the drop in Lighting Science's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
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| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
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| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |