Correlation Between Bank Of and Everspin Technologies

Can any of the company-specific risk be diversified away by investing in both Bank Of and Everspin 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 and Everspin Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Bank of and Everspin Technologies, you can compare the effects of market volatilities on Bank Of and Everspin 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 with a short position of Everspin Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Of and Everspin Technologies.

Diversification Opportunities for Bank Of and Everspin Technologies

0.77

Correlation Coefficient

Bank Of  Everspin Technologies

Poor diversification

The 3 months correlation between Bank and Everspin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and Everspin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everspin Technologies and Bank Of 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 The Bank of are associated (or correlated) with Everspin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everspin Technologies has no effect on the direction of Bank Of i.e., Bank Of and Everspin Technologies go up and down completely randomly.

Pair Corralation between Bank Of and Everspin Technologies

Assuming the 90 days horizon The Bank of is expected to generate 0.49 times more return on investment than Everspin Technologies. However, The Bank of is 2.04 times less risky than Everspin Technologies. It trades about 0.1 of its potential returns per unit of risk. Everspin Technologies is currently generating about 0.03 per unit of risk. If you would invest  3,899  in The Bank of on September 13, 2024 and sell it today you would earn a total of  3,725  from holding The Bank of or generate 95.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

The Bank of  vs.  Everspin Technologies

The Bank

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Bank of are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Bank Of reported solid returns over the last few months and may actually be approaching a breakup point.

Everspin Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Everspin Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Everspin Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Of and Everspin Technologies

The main advantage of trading using opposite Bank Of and Everspin Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Of position performs unexpectedly, Everspin 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 Everspin Technologies will offset losses from the drop in Everspin Technologies' long position.

The idea behind The Bank of and Everspin Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.