Correlation Between Bank of America and Avalo Therapeutics
Can any of the company-specific risk be diversified away by investing in both Bank of America and Avalo Therapeutics 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 Avalo Therapeutics 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 Avalo Therapeutics, you can compare the effects of market volatilities on Bank of America and Avalo Therapeutics 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 Avalo Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Avalo Therapeutics.
Diversification Opportunities for Bank of America and Avalo Therapeutics
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Avalo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Avalo Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avalo Therapeutics 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 Avalo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avalo Therapeutics has no effect on the direction of Bank of America i.e., Bank of America and Avalo Therapeutics go up and down completely randomly.
Pair Corralation between Bank of America and Avalo Therapeutics
Considering the 90-day investment horizon Bank of America is expected to generate 0.46 times more return on investment than Avalo Therapeutics. However, Bank of America is 2.16 times less risky than Avalo Therapeutics. It trades about 0.27 of its potential returns per unit of risk. Avalo Therapeutics is currently generating about -0.34 per unit of risk. If you would invest 4,189 in Bank of America on August 26, 2024 and sell it today you would earn a total of 511.00 from holding Bank of America or generate 12.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Avalo Therapeutics
Performance |
| Timeline |
| Bank of America |
| Avalo Therapeutics |
Bank of America and Avalo Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Avalo Therapeutics
The main advantage of trading using opposite Bank of America and Avalo Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Avalo Therapeutics 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 Avalo Therapeutics will offset losses from the drop in Avalo Therapeutics' long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Avalo Therapeutics vs. AnaptysBio | Avalo Therapeutics vs. Arcellx | Avalo Therapeutics vs. Structure Therapeutics American | Avalo Therapeutics vs. Aerovate Therapeutics |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |