Correlation Between Bank of America and Biogen
Can any of the company-specific risk be diversified away by investing in both Bank of America and Biogen 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 Biogen 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 Biogen Inc, you can compare the effects of market volatilities on Bank of America and Biogen 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 Biogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Biogen.
Diversification Opportunities for Bank of America and Biogen
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Biogen is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc 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 Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of Bank of America i.e., Bank of America and Biogen go up and down completely randomly.
Pair Corralation between Bank of America and Biogen
Considering the 90-day investment horizon Bank of America is expected to generate 1.23 times more return on investment than Biogen. However, Bank of America is 1.23 times more volatile than Biogen Inc. It trades about 0.22 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.29 per unit of risk. If you would invest 4,265 in Bank of America on August 25, 2024 and sell it today you would earn a total of 435.00 from holding Bank of America or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Biogen Inc
Performance |
| Timeline |
| Bank of America |
| Biogen Inc |
Bank of America and Biogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Biogen
The main advantage of trading using opposite Bank of America and Biogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Biogen 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 Biogen will offset losses from the drop in Biogen'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 |
| Biogen vs. EIDESVIK OFFSHORE NK | Biogen vs. Suntory Beverage Food | Biogen vs. GREENX METALS LTD | Biogen vs. Harmony Gold Mining |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |