Correlation Between Bank of America and Alligator Bioscience
Can any of the company-specific risk be diversified away by investing in both Bank of America and Alligator Bioscience 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 Alligator Bioscience 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 Alligator Bioscience AB, you can compare the effects of market volatilities on Bank of America and Alligator Bioscience 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 Alligator Bioscience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Alligator Bioscience.
Diversification Opportunities for Bank of America and Alligator Bioscience
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Alligator is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Alligator Bioscience AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alligator Bioscience 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 Alligator Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alligator Bioscience has no effect on the direction of Bank of America i.e., Bank of America and Alligator Bioscience go up and down completely randomly.
Pair Corralation between Bank of America and Alligator Bioscience
Considering the 90-day investment horizon Bank of America is expected to generate 1.1 times less return on investment than Alligator Bioscience. But when comparing it to its historical volatility, Bank of America is 3.83 times less risky than Alligator Bioscience. It trades about 0.1 of its potential returns per unit of risk. Alligator Bioscience AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 53.00 in Alligator Bioscience AB on August 31, 2024 and sell it today you would earn a total of 2.00 from holding Alligator Bioscience AB or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Bank of America vs. Alligator Bioscience AB
Performance |
| Timeline |
| Bank of America |
| Alligator Bioscience |
Bank of America and Alligator Bioscience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Alligator Bioscience
The main advantage of trading using opposite Bank of America and Alligator Bioscience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Alligator Bioscience 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 Alligator Bioscience will offset losses from the drop in Alligator Bioscience's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| Alligator Bioscience vs. Cantargia AB | Alligator Bioscience vs. BioArctic AB | Alligator Bioscience vs. Oncopeptides AB | Alligator Bioscience vs. Hansa Biopharma AB |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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