Correlation Between Bank of America and Medigene
Can any of the company-specific risk be diversified away by investing in both Bank of America and Medigene 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 Medigene 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 Medigene AG, you can compare the effects of market volatilities on Bank of America and Medigene 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 Medigene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Medigene.
Diversification Opportunities for Bank of America and Medigene
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Medigene is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Medigene AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medigene AG 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 Medigene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medigene AG has no effect on the direction of Bank of America i.e., Bank of America and Medigene go up and down completely randomly.
Pair Corralation between Bank of America and Medigene
If you would invest 4,562 in Bank of America on September 14, 2024 and sell it today you would earn a total of 46.00 from holding Bank of America or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Bank of America vs. Medigene AG
Performance |
| Timeline |
| Bank of America |
| Medigene AG |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and Medigene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Medigene
The main advantage of trading using opposite Bank of America and Medigene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Medigene 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 Medigene will offset losses from the drop in Medigene's long position.The idea behind Bank of America and Medigene AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Medigene vs. Northwest Biotherapeutics | Medigene vs. Geron | Medigene vs. Advanced Proteome Therapeutics | Medigene vs. Oxford BioDynamics Plc |
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.
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