Correlation Between Edgewise Therapeutics and Bank of America
Can any of the company-specific risk be diversified away by investing in both Edgewise Therapeutics and Bank of America 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 Edgewise Therapeutics and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edgewise Therapeutics and Bank of America, you can compare the effects of market volatilities on Edgewise Therapeutics and Bank of America 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 Edgewise Therapeutics with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgewise Therapeutics and Bank of America.
Diversification Opportunities for Edgewise Therapeutics and Bank of America
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Edgewise and Bank is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Edgewise Therapeutics and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America and Edgewise Therapeutics 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 Edgewise Therapeutics are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Edgewise Therapeutics i.e., Edgewise Therapeutics and Bank of America go up and down completely randomly.
Pair Corralation between Edgewise Therapeutics and Bank of America
Given the investment horizon of 90 days Edgewise Therapeutics is expected to generate 3.32 times more return on investment than Bank of America. However, Edgewise Therapeutics is 3.32 times more volatile than Bank of America. It trades about 0.08 of its potential returns per unit of risk. Bank of America is currently generating about 0.06 per unit of risk. If you would invest 809.00 in Edgewise Therapeutics on September 4, 2024 and sell it today you would earn a total of 2,345 from holding Edgewise Therapeutics or generate 289.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edgewise Therapeutics vs. Bank of America
Performance |
| Timeline |
| Edgewise Therapeutics |
| Bank of America |
Edgewise Therapeutics and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edgewise Therapeutics and Bank of America
The main advantage of trading using opposite Edgewise Therapeutics and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgewise Therapeutics position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Edgewise Therapeutics vs. Candel Therapeutics | Edgewise Therapeutics vs. Cingulate Warrants | Edgewise Therapeutics vs. Unicycive Therapeutics | Edgewise Therapeutics vs. Quoin Pharmaceuticals Ltd |
| Bank of America vs. Citigroup | Bank of America vs. Aquagold International | Bank of America vs. Thrivent High Yield | Bank of America vs. Morningstar Unconstrained Allocation |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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