Correlation Between Bank of America and Profound Medical
Can any of the company-specific risk be diversified away by investing in both Bank of America and Profound Medical 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 Profound Medical 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 Profound Medical Corp, you can compare the effects of market volatilities on Bank of America and Profound Medical 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 Profound Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Profound Medical.
Diversification Opportunities for Bank of America and Profound Medical
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Profound is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Profound Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profound Medical Corp 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 Profound Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profound Medical Corp has no effect on the direction of Bank of America i.e., Bank of America and Profound Medical go up and down completely randomly.
Pair Corralation between Bank of America and Profound Medical
Assuming the 90 days trading horizon Bank of America is expected to generate 0.39 times more return on investment than Profound Medical. However, Bank of America is 2.56 times less risky than Profound Medical. It trades about 0.24 of its potential returns per unit of risk. Profound Medical Corp is currently generating about 0.05 per unit of risk. If you would invest 2,299 in Bank of America on October 21, 2024 and sell it today you would earn a total of 116.00 from holding Bank of America or generate 5.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Profound Medical Corp
Performance |
| Timeline |
| Bank of America |
| Profound Medical Corp |
Bank of America and Profound Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Profound Medical
The main advantage of trading using opposite Bank of America and Profound Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Profound Medical 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 Profound Medical will offset losses from the drop in Profound Medical's long position.| Bank of America vs. Canadian Utilities Limited | Bank of America vs. Millbank Mining Corp | Bank of America vs. A W FOOD | Bank of America vs. Financial 15 Split |
| Profound Medical vs. HLS Therapeutics | Profound Medical vs. Medicenna Therapeutics Corp | Profound Medical vs. Aptose Biosciences |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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