Correlation Between Bank of America and Mfs Diversified
Can any of the company-specific risk be diversified away by investing in both Bank of America and Mfs Diversified 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 Mfs Diversified 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 Mfs Diversified Income, you can compare the effects of market volatilities on Bank of America and Mfs Diversified 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 Mfs Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Mfs Diversified.
Diversification Opportunities for Bank of America and Mfs Diversified
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Mfs is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Mfs Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Diversified Income 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 Mfs Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Diversified Income has no effect on the direction of Bank of America i.e., Bank of America and Mfs Diversified go up and down completely randomly.
Pair Corralation between Bank of America and Mfs Diversified
Considering the 90-day investment horizon Bank of America is expected to under-perform the Mfs Diversified. In addition to that, Bank of America is 6.52 times more volatile than Mfs Diversified Income. It trades about -0.25 of its total potential returns per unit of risk. Mfs Diversified Income is currently generating about -0.09 per unit of volatility. If you would invest 1,210 in Mfs Diversified Income on January 5, 2025 and sell it today you would lose (20.00) from holding Mfs Diversified Income or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Bank of America vs. Mfs Diversified Income
Performance |
| Timeline |
| Bank of America |
| Mfs Diversified Income |
Bank of America and Mfs Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Mfs Diversified
The main advantage of trading using opposite Bank of America and Mfs Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Mfs Diversified 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 Mfs Diversified will offset losses from the drop in Mfs Diversified's long position.| Bank of America vs. Barclays PLC ADR | Bank of America vs. ING Group NV | Bank of America vs. Banco Santander SA | Bank of America vs. HSBC Holdings PLC |
| Mfs Diversified vs. Delaware Investments Ultrashort | Mfs Diversified vs. Angel Oak Ultrashort | Mfs Diversified vs. Dreyfus Short Intermediate | Mfs Diversified vs. Fidelity Flex Servative |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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