Correlation Between Bank of America and Minerva Neurosciences
Can any of the company-specific risk be diversified away by investing in both Bank of America and Minerva Neurosciences 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 Minerva Neurosciences 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 Minerva Neurosciences, you can compare the effects of market volatilities on Bank of America and Minerva Neurosciences 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 Minerva Neurosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Minerva Neurosciences.
Diversification Opportunities for Bank of America and Minerva Neurosciences
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Minerva is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Minerva Neurosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerva Neurosciences 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 Minerva Neurosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerva Neurosciences has no effect on the direction of Bank of America i.e., Bank of America and Minerva Neurosciences go up and down completely randomly.
Pair Corralation between Bank of America and Minerva Neurosciences
Considering the 90-day investment horizon Bank of America is expected to generate 3.64 times less return on investment than Minerva Neurosciences. But when comparing it to its historical volatility, Bank of America is 4.7 times less risky than Minerva Neurosciences. It trades about 0.06 of its potential returns per unit of risk. Minerva Neurosciences is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 166.00 in Minerva Neurosciences on August 31, 2024 and sell it today you would earn a total of 59.50 from holding Minerva Neurosciences or generate 35.84% 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. Minerva Neurosciences
Performance |
| Timeline |
| Bank of America |
| Minerva Neurosciences |
Bank of America and Minerva Neurosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Minerva Neurosciences
The main advantage of trading using opposite Bank of America and Minerva Neurosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Minerva Neurosciences 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 Minerva Neurosciences will offset losses from the drop in Minerva Neurosciences' 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 |
| Minerva Neurosciences vs. Reviva Pharmaceuticals Holdings | Minerva Neurosciences vs. Eyenovia | Minerva Neurosciences vs. Cognition Therapeutics | Minerva Neurosciences vs. Transcode Therapeutics |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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