Correlation Between Bank of America and Hudson Technologies
Can any of the company-specific risk be diversified away by investing in both Bank of America and Hudson Technologies 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 Hudson Technologies 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 Hudson Technologies, you can compare the effects of market volatilities on Bank of America and Hudson Technologies 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 Hudson Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Hudson Technologies.
Diversification Opportunities for Bank of America and Hudson Technologies
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Hudson is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Hudson Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Technologies 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 Hudson Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Technologies has no effect on the direction of Bank of America i.e., Bank of America and Hudson Technologies go up and down completely randomly.
Pair Corralation between Bank of America and Hudson Technologies
Assuming the 90 days trading horizon Bank of America is expected to generate 0.13 times more return on investment than Hudson Technologies. However, Bank of America is 7.96 times less risky than Hudson Technologies. It trades about 0.02 of its potential returns per unit of risk. Hudson Technologies is currently generating about -0.19 per unit of risk. If you would invest 2,292 in Bank of America on September 3, 2024 and sell it today you would earn a total of 6.00 from holding Bank of America or generate 0.26% 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. Hudson Technologies
Performance |
| Timeline |
| Bank of America |
| Hudson Technologies |
Bank of America and Hudson Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Hudson Technologies
The main advantage of trading using opposite Bank of America and Hudson Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Hudson Technologies 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 Hudson Technologies will offset losses from the drop in Hudson Technologies' long position.| Bank of America vs. Bank of America | Bank of America vs. Wells Fargo | Bank of America vs. Bank of America | Bank of America vs. China Construction Bank |
| Hudson Technologies vs. Sensient Technologies | Hudson Technologies vs. Innospec | Hudson Technologies vs. H B Fuller | Hudson Technologies vs. Quaker Chemical |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |