Correlation Between Bank of America and Knight Therapeutics
Can any of the company-specific risk be diversified away by investing in both Bank of America and Knight Therapeutics 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 Knight Therapeutics 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 Knight Therapeutics, you can compare the effects of market volatilities on Bank of America and Knight Therapeutics 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 Knight Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Knight Therapeutics.
Diversification Opportunities for Bank of America and Knight Therapeutics
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Knight is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Knight Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Therapeutics 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 Knight Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Therapeutics has no effect on the direction of Bank of America i.e., Bank of America and Knight Therapeutics go up and down completely randomly.
Pair Corralation between Bank of America and Knight Therapeutics
Considering the 90-day investment horizon Bank of America is expected to generate 0.86 times more return on investment than Knight Therapeutics. However, Bank of America is 1.17 times less risky than Knight Therapeutics. It trades about 0.1 of its potential returns per unit of risk. Knight Therapeutics is currently generating about -0.06 per unit of risk. If you would invest 3,883 in Bank of America on August 25, 2024 and sell it today you would earn a total of 817.00 from holding Bank of America or generate 21.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Bank of America vs. Knight Therapeutics
Performance |
| Timeline |
| Bank of America |
| Knight Therapeutics |
Bank of America and Knight Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Knight Therapeutics
The main advantage of trading using opposite Bank of America and Knight Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Knight Therapeutics 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 Knight Therapeutics will offset losses from the drop in Knight Therapeutics' 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 |
| Knight Therapeutics vs. Rezolute | Knight Therapeutics vs. Tempest Therapeutics | Knight Therapeutics vs. Forte Biosciences | Knight Therapeutics vs. Dyadic International |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |