Correlation Between Bank of America and Magni Tech
Can any of the company-specific risk be diversified away by investing in both Bank of America and Magni Tech 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 Magni Tech 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 Magni Tech Industries, you can compare the effects of market volatilities on Bank of America and Magni Tech 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 Magni Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Magni Tech.
Diversification Opportunities for Bank of America and Magni Tech
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Magni is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Magni Tech Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magni Tech Industries 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 Magni Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magni Tech Industries has no effect on the direction of Bank of America i.e., Bank of America and Magni Tech go up and down completely randomly.
Pair Corralation between Bank of America and Magni Tech
Considering the 90-day investment horizon Bank of America is expected to generate 1.21 times less return on investment than Magni Tech. But when comparing it to its historical volatility, Bank of America is 1.28 times less risky than Magni Tech. It trades about 0.11 of its potential returns per unit of risk. Magni Tech Industries is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 215.00 in Magni Tech Industries on September 2, 2024 and sell it today you would earn a total of 55.00 from holding Magni Tech Industries or generate 25.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Magni Tech Industries
Performance |
| Timeline |
| Bank of America |
| Magni Tech Industries |
Bank of America and Magni Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Magni Tech
The main advantage of trading using opposite Bank of America and Magni Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Magni Tech 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 Magni Tech will offset losses from the drop in Magni Tech's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Magni Tech vs. Southern Steel Bhd | Magni Tech vs. Al Aqar Healthcare | Magni Tech vs. Sports Toto Berhad | Magni Tech vs. KPJ Healthcare Bhd |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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