Correlation Between Bank of America and Evelo Biosciences
Can any of the company-specific risk be diversified away by investing in both Bank of America and Evelo Biosciences 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 Evelo Biosciences 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 Evelo Biosciences, you can compare the effects of market volatilities on Bank of America and Evelo Biosciences 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 Evelo Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Evelo Biosciences.
Diversification Opportunities for Bank of America and Evelo Biosciences
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Evelo is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Evelo Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evelo Biosciences 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 Evelo Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evelo Biosciences has no effect on the direction of Bank of America i.e., Bank of America and Evelo Biosciences go up and down completely randomly.
Pair Corralation between Bank of America and Evelo Biosciences
Considering the 90-day investment horizon Bank of America is expected to generate 43.12 times less return on investment than Evelo Biosciences. But when comparing it to its historical volatility, Bank of America is 15.13 times less risky than Evelo Biosciences. It trades about 0.1 of its potential returns per unit of risk. Evelo Biosciences is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 212.00 in Evelo Biosciences on August 31, 2024 and sell it today you would earn a total of 611.00 from holding Evelo Biosciences or generate 288.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 8.56% |
| Values | Daily Returns |
Bank of America vs. Evelo Biosciences
Performance |
| Timeline |
| Bank of America |
| Evelo Biosciences |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and Evelo Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Evelo Biosciences
The main advantage of trading using opposite Bank of America and Evelo Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Evelo Biosciences 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 Evelo Biosciences will offset losses from the drop in Evelo Biosciences' 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 |
| Evelo Biosciences vs. Aileron Therapeutics | Evelo Biosciences vs. ABVC Biopharma | Evelo Biosciences vs. Surrozen | Evelo Biosciences vs. Processa Pharmaceuticals |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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