Correlation Between Bank of America and Black Diamond
Can any of the company-specific risk be diversified away by investing in both Bank of America and Black Diamond 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 Black Diamond 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 Black Diamond Therapeutics, you can compare the effects of market volatilities on Bank of America and Black Diamond 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 Black Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Black Diamond.
Diversification Opportunities for Bank of America and Black Diamond
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Black is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Black Diamond Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Diamond Therap 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 Black Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Diamond Therap has no effect on the direction of Bank of America i.e., Bank of America and Black Diamond go up and down completely randomly.
Pair Corralation between Bank of America and Black Diamond
Considering the 90-day investment horizon Bank of America is expected to generate 3.32 times less return on investment than Black Diamond. But when comparing it to its historical volatility, Bank of America is 8.88 times less risky than Black Diamond. It trades about 0.1 of its potential returns per unit of risk. Black Diamond Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 214.00 in Black Diamond Therapeutics on August 31, 2024 and sell it today you would earn a total of 51.00 from holding Black Diamond Therapeutics or generate 23.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Black Diamond Therapeutics
Performance |
| Timeline |
| Bank of America |
| Black Diamond Therap |
Bank of America and Black Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Black Diamond
The main advantage of trading using opposite Bank of America and Black Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Black Diamond 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 Black Diamond will offset losses from the drop in Black Diamond'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 |
| Black Diamond vs. Passage Bio | Black Diamond vs. Alector | Black Diamond vs. Revolution Medicines | Black Diamond vs. Stoke 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Commodity Directory Find actively traded commodities issued by global exchanges |