Correlation Between Bank of America and Spirax-Sarco Engineering
Can any of the company-specific risk be diversified away by investing in both Bank of America and Spirax-Sarco Engineering 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 Spirax-Sarco Engineering 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 Spirax Sarco Engineering PLC, you can compare the effects of market volatilities on Bank of America and Spirax-Sarco Engineering 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 Spirax-Sarco Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Spirax-Sarco Engineering.
Diversification Opportunities for Bank of America and Spirax-Sarco Engineering
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Spirax-Sarco is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Spirax Sarco Engineering PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirax-Sarco Engineering 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 Spirax-Sarco Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirax-Sarco Engineering has no effect on the direction of Bank of America i.e., Bank of America and Spirax-Sarco Engineering go up and down completely randomly.
Pair Corralation between Bank of America and Spirax-Sarco Engineering
Considering the 90-day investment horizon Bank of America is expected to generate 0.82 times more return on investment than Spirax-Sarco Engineering. However, Bank of America is 1.22 times less risky than Spirax-Sarco Engineering. It trades about 0.24 of its potential returns per unit of risk. Spirax Sarco Engineering PLC is currently generating about -0.13 per unit of risk. If you would invest 3,945 in Bank of America on August 25, 2024 and sell it today you would earn a total of 755.00 from holding Bank of America or generate 19.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Spirax Sarco Engineering PLC
Performance |
| Timeline |
| Bank of America |
| Spirax-Sarco Engineering |
Bank of America and Spirax-Sarco Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Spirax-Sarco Engineering
The main advantage of trading using opposite Bank of America and Spirax-Sarco Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Spirax-Sarco Engineering 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 Spirax-Sarco Engineering will offset losses from the drop in Spirax-Sarco Engineering's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Spirax-Sarco Engineering vs. Aumann AG | Spirax-Sarco Engineering vs. Arista Power | Spirax-Sarco Engineering vs. Atlas Copco AB | Spirax-Sarco Engineering vs. American Commerce Solutions |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |