Correlation Between Bank of America and MA Financial
Can any of the company-specific risk be diversified away by investing in both Bank of America and MA Financial 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 MA Financial 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 MA Financial Group, you can compare the effects of market volatilities on Bank of America and MA Financial 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 MA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and MA Financial.
Diversification Opportunities for Bank of America and MA Financial
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and MAF is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and MA Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MA Financial Group 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 MA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MA Financial Group has no effect on the direction of Bank of America i.e., Bank of America and MA Financial go up and down completely randomly.
Pair Corralation between Bank of America and MA Financial
Considering the 90-day investment horizon Bank of America is expected to under-perform the MA Financial. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 1.94 times less risky than MA Financial. The stock trades about -0.01 of its potential returns per unit of risk. The MA Financial Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 619.00 in MA Financial Group on December 1, 2024 and sell it today you would earn a total of 202.00 from holding MA Financial Group or generate 32.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.36% |
Values | Daily Returns |
Bank of America vs. MA Financial Group
Performance |
Timeline |
Bank of America |
MA Financial Group |
Bank of America and MA Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and MA Financial
The main advantage of trading using opposite Bank of America and MA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, MA Financial 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 MA Financial will offset losses from the drop in MA Financial's 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 |
MA Financial vs. COG Financial Services | MA Financial vs. Bisalloy Steel Group | MA Financial vs. Liberty Financial Group | MA Financial vs. Bluescope Steel |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |