Correlation Between Bank of America and Ecosciences

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

Diversification Opportunities for Bank of America and Ecosciences

0.79

Correlation Coefficient

Bank of America  Ecosciences

Poor diversification

The 3 months correlation between Bank and Ecosciences is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Ecosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecosciences 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 Ecosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecosciences has no effect on the direction of Bank of America i.e., Bank of America and Ecosciences go up and down completely randomly.

Pair Corralation between Bank of America and Ecosciences

Considering the 90-day investment horizon Bank of America is expected to generate 86.5 times less return on investment than Ecosciences. But when comparing it to its historical volatility, Bank of America is 99.93 times less risky than Ecosciences. It trades about 0.15 of its potential returns per unit of risk. Ecosciences is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Ecosciences on May 5, 2025 and sell it today you would earn a total of  0.01  from holding Ecosciences or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Bank of America  vs.  Ecosciences

Bank of America

Risk-Adjusted Performance

Good

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 unfluctuating basic indicators, Bank of America may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Ecosciences

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ecosciences are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Ecosciences showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of America and Ecosciences

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

The idea behind Bank of America and Ecosciences 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.