Correlation Between Bank of America and Sigilon Therapeutics

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

Diversification Opportunities for Bank of America and Sigilon Therapeutics

0.0

Correlation Coefficient

Bank of America  Sigilon Therapeutics

Pay attention - limited upside

The 3 months correlation between Bank and Sigilon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Sigilon Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sigilon Therapeutics 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 Sigilon Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sigilon Therapeutics has no effect on the direction of Bank of America i.e., Bank of America and Sigilon Therapeutics go up and down completely randomly.

Pair Corralation between Bank of America and Sigilon Therapeutics

If you would invest (100.00) in Sigilon Therapeutics on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Sigilon Therapeutics or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Bank of America  vs.  Sigilon Therapeutics

Bank of America

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of America has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bank of America is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sigilon Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sigilon Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Sigilon Therapeutics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank of America and Sigilon Therapeutics

The main advantage of trading using opposite Bank of America and Sigilon Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Sigilon Therapeutics 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 Sigilon Therapeutics will offset losses from the drop in Sigilon Therapeutics' long position.

The idea behind Bank of America and Sigilon Therapeutics 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.