Correlation Between Bank of America and Spectris Plc
Can any of the company-specific risk be diversified away by investing in both Bank of America and Spectris Plc 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 Spectris Plc 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 Spectris plc, you can compare the effects of market volatilities on Bank of America and Spectris Plc 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 Spectris Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Spectris Plc.
Diversification Opportunities for Bank of America and Spectris Plc
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Spectris is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Spectris plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectris plc 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 Spectris Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectris plc has no effect on the direction of Bank of America i.e., Bank of America and Spectris Plc go up and down completely randomly.
Pair Corralation between Bank of America and Spectris Plc
Considering the 90-day investment horizon Bank of America is expected to generate 3.97 times less return on investment than Spectris Plc. But when comparing it to its historical volatility, Bank of America is 6.12 times less risky than Spectris Plc. It trades about 0.28 of its potential returns per unit of risk. Spectris plc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,703 in Spectris plc on April 24, 2025 and sell it today you would earn a total of 2,672 from holding Spectris plc or generate 98.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Spectris plc
Performance |
| Timeline |
| Bank of America |
| Spectris plc |
Bank of America and Spectris Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Spectris Plc
The main advantage of trading using opposite Bank of America and Spectris Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Spectris Plc 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 Spectris Plc will offset losses from the drop in Spectris Plc's long position.| Bank of America vs. JPMorgan Chase Co | Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank |
| Spectris Plc vs. Electro Sensors | Spectris Plc vs. Sono Tek Corp | Spectris Plc vs. Vishay Precision Group | Spectris Plc vs. Keyence |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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