Correlation Between Bank of America and Therapeutic Solutions
Can any of the company-specific risk be diversified away by investing in both Bank of America and Therapeutic Solutions 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 Therapeutic Solutions 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 Therapeutic Solutions International, you can compare the effects of market volatilities on Bank of America and Therapeutic Solutions 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 Therapeutic Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Therapeutic Solutions.
Diversification Opportunities for Bank of America and Therapeutic Solutions
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Therapeutic is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Therapeutic Solutions Internat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Therapeutic Solutions 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 Therapeutic Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Therapeutic Solutions has no effect on the direction of Bank of America i.e., Bank of America and Therapeutic Solutions go up and down completely randomly.
Pair Corralation between Bank of America and Therapeutic Solutions
Considering the 90-day investment horizon Bank of America is expected to under-perform the Therapeutic Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 9.55 times less risky than Therapeutic Solutions. The stock trades about -0.01 of its potential returns per unit of risk. The Therapeutic Solutions International is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.08 in Therapeutic Solutions International on January 11, 2025 and sell it today you would lose (0.06) from holding Therapeutic Solutions International or give up 75.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.52% |
| Values | Daily Returns |
Bank of America vs. Therapeutic Solutions Internat
Performance |
| Timeline |
| Bank of America |
| Therapeutic Solutions |
Bank of America and Therapeutic Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Therapeutic Solutions
The main advantage of trading using opposite Bank of America and Therapeutic Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Therapeutic Solutions 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 Therapeutic Solutions will offset losses from the drop in Therapeutic Solutions' long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
| Therapeutic Solutions vs. Ensysce Biosciences | Therapeutic Solutions vs. Aptorum Group Ltd | Therapeutic Solutions vs. Regen BioPharma | Therapeutic Solutions vs. Cannabics 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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