Correlation Between Bank of America and Evotec SE
Can any of the company-specific risk be diversified away by investing in both Bank of America and Evotec SE 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 Evotec SE 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 Evotec SE, you can compare the effects of market volatilities on Bank of America and Evotec SE 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 Evotec SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Evotec SE.
Diversification Opportunities for Bank of America and Evotec SE
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Evotec is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Evotec SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evotec SE 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 Evotec SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evotec SE has no effect on the direction of Bank of America i.e., Bank of America and Evotec SE go up and down completely randomly.
Pair Corralation between Bank of America and Evotec SE
Considering the 90-day investment horizon Bank of America is expected to generate 0.45 times more return on investment than Evotec SE. However, Bank of America is 2.23 times less risky than Evotec SE. It trades about 0.1 of its potential returns per unit of risk. Evotec SE is currently generating about -0.09 per unit of risk. If you would invest 2,810 in Bank of America on September 2, 2024 and sell it today you would earn a total of 1,941 from holding Bank of America or generate 69.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Bank of America vs. Evotec SE
Performance |
| Timeline |
| Bank of America |
| Evotec SE |
Bank of America and Evotec SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Evotec SE
The main advantage of trading using opposite Bank of America and Evotec SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Evotec SE 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 Evotec SE will offset losses from the drop in Evotec SE's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Evotec SE vs. Pacira BioSciences, | Evotec SE vs. Collegium Pharmaceutical | Evotec SE vs. Prestige Brand Holdings | Evotec SE vs. Phibro Animal Health |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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