Correlation Between Bank of America and BioQuest Corp
Can any of the company-specific risk be diversified away by investing in both Bank of America and BioQuest Corp 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 BioQuest Corp 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 BioQuest Corp, you can compare the effects of market volatilities on Bank of America and BioQuest Corp 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 BioQuest Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and BioQuest Corp.
Diversification Opportunities for Bank of America and BioQuest Corp
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and BioQuest is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and BioQuest Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioQuest Corp 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 BioQuest Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioQuest Corp has no effect on the direction of Bank of America i.e., Bank of America and BioQuest Corp go up and down completely randomly.
Pair Corralation between Bank of America and BioQuest Corp
Considering the 90-day investment horizon Bank of America is expected to generate 19.19 times less return on investment than BioQuest Corp. But when comparing it to its historical volatility, Bank of America is 43.55 times less risky than BioQuest Corp. It trades about 0.13 of its potential returns per unit of risk. BioQuest Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 194.00 in BioQuest Corp on August 26, 2024 and sell it today you would lose (99.00) from holding BioQuest Corp or give up 51.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. BioQuest Corp
Performance |
| Timeline |
| Bank of America |
| BioQuest Corp |
Bank of America and BioQuest Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and BioQuest Corp
The main advantage of trading using opposite Bank of America and BioQuest Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, BioQuest Corp 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 BioQuest Corp will offset losses from the drop in BioQuest Corp's 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 |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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