Correlation Between Bank of America and Spectral Med
Can any of the company-specific risk be diversified away by investing in both Bank of America and Spectral Med 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 Spectral Med 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 Spectral Med, you can compare the effects of market volatilities on Bank of America and Spectral Med 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 Spectral Med. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Spectral Med.
Diversification Opportunities for Bank of America and Spectral Med
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Spectral is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Spectral Med in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectral Med 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 Spectral Med. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectral Med has no effect on the direction of Bank of America i.e., Bank of America and Spectral Med go up and down completely randomly.
Pair Corralation between Bank of America and Spectral Med
Assuming the 90 days trading horizon Bank of America is expected to generate 1.94 times less return on investment than Spectral Med. But when comparing it to its historical volatility, Bank of America is 2.56 times less risky than Spectral Med. It trades about 0.06 of its potential returns per unit of risk. Spectral Med is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 34.00 in Spectral Med on September 4, 2024 and sell it today you would earn a total of 21.00 from holding Spectral Med or generate 61.76% 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. Spectral Med
Performance |
| Timeline |
| Bank of America |
| Spectral Med |
Bank of America and Spectral Med Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Spectral Med
The main advantage of trading using opposite Bank of America and Spectral Med positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Spectral Med 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 Spectral Med will offset losses from the drop in Spectral Med's long position.| Bank of America vs. Computer Modelling Group | Bank of America vs. Solid Impact Investments | Bank of America vs. Canadian General Investments | Bank of America vs. Partners Value Investments |
| Spectral Med vs. Helix BioPharma Corp | Spectral Med vs. Aptose Biosciences | Spectral Med vs. Microbix Biosystems | Spectral Med vs. Resverlogix Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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