Correlation Between Bank of America and Mercuries Life
Can any of the company-specific risk be diversified away by investing in both Bank of America and Mercuries Life 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 Mercuries Life 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 Mercuries Life Insurance, you can compare the effects of market volatilities on Bank of America and Mercuries Life 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 Mercuries Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Mercuries Life.
Diversification Opportunities for Bank of America and Mercuries Life
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Mercuries is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Mercuries Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercuries Life Insurance 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 Mercuries Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercuries Life Insurance has no effect on the direction of Bank of America i.e., Bank of America and Mercuries Life go up and down completely randomly.
Pair Corralation between Bank of America and Mercuries Life
Considering the 90-day investment horizon Bank of America is expected to generate 0.96 times more return on investment than Mercuries Life. However, Bank of America is 1.04 times less risky than Mercuries Life. It trades about 0.05 of its potential returns per unit of risk. Mercuries Life Insurance is currently generating about 0.02 per unit of risk. If you would invest 3,278 in Bank of America on August 24, 2024 and sell it today you would earn a total of 1,431 from holding Bank of America or generate 43.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.77% |
| Values | Daily Returns |
Bank of America vs. Mercuries Life Insurance
Performance |
| Timeline |
| Bank of America |
| Mercuries Life Insurance |
Bank of America and Mercuries Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Mercuries Life
The main advantage of trading using opposite Bank of America and Mercuries Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Mercuries Life 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 Mercuries Life will offset losses from the drop in Mercuries Life's long position.| Bank of America vs. Amtech Systems | Bank of America vs. Gold Fields Ltd | Bank of America vs. Aegean Airlines SA | Bank of America vs. Merck Company |
| Mercuries Life vs. Fubon Financial Holding | Mercuries Life vs. Cathay Financial Holding | Mercuries Life vs. ESUN Financial Holding |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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