Correlation Between Bank of America and ALTEOGEN
Can any of the company-specific risk be diversified away by investing in both Bank of America and ALTEOGEN 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 ALTEOGEN 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 ALTEOGEN, you can compare the effects of market volatilities on Bank of America and ALTEOGEN 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 ALTEOGEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and ALTEOGEN.
Diversification Opportunities for Bank of America and ALTEOGEN
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and ALTEOGEN is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and ALTEOGEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTEOGEN 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 ALTEOGEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALTEOGEN has no effect on the direction of Bank of America i.e., Bank of America and ALTEOGEN go up and down completely randomly.
Pair Corralation between Bank of America and ALTEOGEN
Considering the 90-day investment horizon Bank of America is expected to generate 7.52 times less return on investment than ALTEOGEN. But when comparing it to its historical volatility, Bank of America is 3.14 times less risky than ALTEOGEN. It trades about 0.05 of its potential returns per unit of risk. ALTEOGEN is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,945,000 in ALTEOGEN on November 6, 2024 and sell it today you would earn a total of 31,305,000 from holding ALTEOGEN or generate 793.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.96% |
| Values | Daily Returns |
Bank of America vs. ALTEOGEN
Performance |
| Timeline |
| Bank of America |
| ALTEOGEN |
Bank of America and ALTEOGEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and ALTEOGEN
The main advantage of trading using opposite Bank of America and ALTEOGEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, ALTEOGEN 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 ALTEOGEN will offset losses from the drop in ALTEOGEN's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Royal Bank of | Bank of America vs. Canadian Imperial Bank |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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