Correlation Between Bank of America and Eventide Gilead
Can any of the company-specific risk be diversified away by investing in both Bank of America and Eventide Gilead 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 Eventide Gilead 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 Eventide Gilead, you can compare the effects of market volatilities on Bank of America and Eventide Gilead 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 Eventide Gilead. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Eventide Gilead.
Diversification Opportunities for Bank of America and Eventide Gilead
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Eventide is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Eventide Gilead in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Gilead 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 Eventide Gilead. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Gilead has no effect on the direction of Bank of America i.e., Bank of America and Eventide Gilead go up and down completely randomly.
Pair Corralation between Bank of America and Eventide Gilead
Considering the 90-day investment horizon Bank of America is expected to generate 1.28 times more return on investment than Eventide Gilead. However, Bank of America is 1.28 times more volatile than Eventide Gilead. It trades about 0.1 of its potential returns per unit of risk. Eventide Gilead is currently generating about 0.04 per unit of risk. If you would invest 2,820 in Bank of America on August 31, 2024 and sell it today you would earn a total of 1,931 from holding Bank of America or generate 68.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Eventide Gilead
Performance |
| Timeline |
| Bank of America |
| Eventide Gilead |
Bank of America and Eventide Gilead Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Eventide Gilead
The main advantage of trading using opposite Bank of America and Eventide Gilead positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Eventide Gilead 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 Eventide Gilead will offset losses from the drop in Eventide Gilead'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 |
| Eventide Gilead vs. Eventide Core Bond | Eventide Gilead vs. Eventide Multi Asset Income | Eventide Gilead vs. Eventide Exponential Technologies | Eventide Gilead vs. Eventide Global Dividend |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |