Correlation Between Spire Global and Bank of America
Can any of the company-specific risk be diversified away by investing in both Spire Global and Bank of America 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 Spire Global and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Global and Bank of America, you can compare the effects of market volatilities on Spire Global and Bank of America 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 Spire Global with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and Bank of America.
Diversification Opportunities for Spire Global and Bank of America
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spire and Bank is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America and Spire Global 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 Spire Global are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Spire Global i.e., Spire Global and Bank of America go up and down completely randomly.
Pair Corralation between Spire Global and Bank of America
Given the investment horizon of 90 days Spire Global is expected to under-perform the Bank of America. In addition to that, Spire Global is 9.75 times more volatile than Bank of America. It trades about -0.08 of its total potential returns per unit of risk. Bank of America is currently generating about -0.18 per unit of volatility. If you would invest 4,483 in Bank of America on December 2, 2024 and sell it today you would lose (215.00) from holding Bank of America or give up 4.8% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
Spire Global vs. Bank of America
Performance |
Timeline |
Spire Global |
Bank of America |
Spire Global and Bank of America Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Spire Global and Bank of America
The main advantage of trading using opposite Spire Global and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Global position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.Spire Global vs. Lichen China Limited | Spire Global vs. Unifirst | Spire Global vs. First Advantage Corp | Spire Global vs. Network 1 Technologies |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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