Correlation Between Bank of America and Reata Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Bank of America and Reata Pharmaceuticals 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 Reata Pharmaceuticals 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 Reata Pharmaceuticals, you can compare the effects of market volatilities on Bank of America and Reata Pharmaceuticals 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 Reata Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Reata Pharmaceuticals.
Diversification Opportunities for Bank of America and Reata Pharmaceuticals
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Reata is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Reata Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reata Pharmaceuticals 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 Reata Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reata Pharmaceuticals has no effect on the direction of Bank of America i.e., Bank of America and Reata Pharmaceuticals go up and down completely randomly.
Pair Corralation between Bank of America and Reata Pharmaceuticals
If you would invest 3,940 in Bank of America on August 28, 2024 and sell it today you would earn a total of 810.00 from holding Bank of America or generate 20.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 2.38% |
| Values | Daily Returns |
Bank of America vs. Reata Pharmaceuticals
Performance |
| Timeline |
| Bank of America |
| Reata Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and Reata Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Reata Pharmaceuticals
The main advantage of trading using opposite Bank of America and Reata Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Reata Pharmaceuticals 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 Reata Pharmaceuticals will offset losses from the drop in Reata Pharmaceuticals' long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal | Bank of America vs. Bank of Nova |
| Reata Pharmaceuticals vs. Sarepta Therapeutics | Reata Pharmaceuticals vs. Krystal Biotech | Reata Pharmaceuticals vs. PTC Therapeutics | Reata Pharmaceuticals vs. Madrigal Pharmaceuticals |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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