Correlation Between Bank of America and Vascular Biogenics

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Can any of the company-specific risk be diversified away by investing in both Bank of America and Vascular Biogenics 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 Vascular Biogenics 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 Vascular Biogenics, you can compare the effects of market volatilities on Bank of America and Vascular Biogenics 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 Vascular Biogenics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Vascular Biogenics.

Diversification Opportunities for Bank of America and Vascular Biogenics

-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between Bank and Vascular is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Vascular Biogenics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vascular Biogenics 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 Vascular Biogenics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vascular Biogenics has no effect on the direction of Bank of America i.e., Bank of America and Vascular Biogenics go up and down completely randomly.

Pair Corralation between Bank of America and Vascular Biogenics

If you would invest  3,826  in Bank of America on March 15, 2024 and sell it today you would earn a total of  115.00  from holding Bank of America or generate 3.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy4.76%
ValuesDaily Returns

Bank of America  vs.  Vascular Biogenics

 Performance 
       Timeline  
Bank of America 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Bank of America may actually be approaching a critical reversion point that can send shares even higher in July 2024.
Vascular Biogenics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Vascular Biogenics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Vascular Biogenics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Bank of America and Vascular Biogenics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank of America and Vascular Biogenics

The main advantage of trading using opposite Bank of America and Vascular Biogenics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Vascular Biogenics 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 Vascular Biogenics will offset losses from the drop in Vascular Biogenics' long position.
The idea behind Bank of America and Vascular Biogenics 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.
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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