Correlation Between Bank of America and Brickell Biotech
Can any of the company-specific risk be diversified away by investing in both Bank of America and Brickell Biotech 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 Brickell Biotech 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 Brickell Biotech, you can compare the effects of market volatilities on Bank of America and Brickell Biotech 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 Brickell Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Brickell Biotech.
Diversification Opportunities for Bank of America and Brickell Biotech
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Brickell is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Brickell Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brickell Biotech 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 Brickell Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brickell Biotech has no effect on the direction of Bank of America i.e., Bank of America and Brickell Biotech go up and down completely randomly.
Pair Corralation between Bank of America and Brickell Biotech
If you would invest 3,036 in Bank of America on September 3, 2024 and sell it today you would earn a total of 1,668 from holding Bank of America or generate 54.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.4% |
| Values | Daily Returns |
Bank of America vs. Brickell Biotech
Performance |
| Timeline |
| Bank of America |
| Brickell Biotech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and Brickell Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Brickell Biotech
The main advantage of trading using opposite Bank of America and Brickell Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Brickell Biotech 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 Brickell Biotech will offset losses from the drop in Brickell Biotech's long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| Brickell Biotech vs. Griffon | Brickell Biotech vs. Cardinal Health | Brickell Biotech vs. Tandem Diabetes Care | Brickell Biotech vs. Aquestive 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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