Correlation Between Bank of America and 10X GENOMICS
Can any of the company-specific risk be diversified away by investing in both Bank of America and 10X GENOMICS 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 10X GENOMICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and 10X GENOMICS DL, you can compare the effects of market volatilities on Bank of America and 10X GENOMICS 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 10X GENOMICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and 10X GENOMICS.
Diversification Opportunities for Bank of America and 10X GENOMICS
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and 10X is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and 10X GENOMICS DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 10X GENOMICS DL 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 Verizon Communications are associated (or correlated) with 10X GENOMICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 10X GENOMICS DL has no effect on the direction of Bank of America i.e., Bank of America and 10X GENOMICS go up and down completely randomly.
Pair Corralation between Bank of America and 10X GENOMICS
Assuming the 90 days trading horizon Verizon Communications is expected to generate 0.35 times more return on investment than 10X GENOMICS. However, Verizon Communications is 2.89 times less risky than 10X GENOMICS. It trades about 0.05 of its potential returns per unit of risk. 10X GENOMICS DL is currently generating about -0.02 per unit of risk. If you would invest 3,073 in Verizon Communications on September 12, 2024 and sell it today you would earn a total of 943.00 from holding Verizon Communications or generate 30.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. 10X GENOMICS DL
Performance |
| Timeline |
| Verizon Communications |
| 10X GENOMICS DL |
Bank of America and 10X GENOMICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and 10X GENOMICS
The main advantage of trading using opposite Bank of America and 10X GENOMICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, 10X GENOMICS 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 10X GENOMICS will offset losses from the drop in 10X GENOMICS's long position.| Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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