Correlation Between Bank of America and Mace Security
Can any of the company-specific risk be diversified away by investing in both Bank of America and Mace Security 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 Mace Security 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 Mace Security Intl, you can compare the effects of market volatilities on Bank of America and Mace Security 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 Mace Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Mace Security.
Diversification Opportunities for Bank of America and Mace Security
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Mace is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Mace Security Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mace Security Intl 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 Mace Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mace Security Intl has no effect on the direction of Bank of America i.e., Bank of America and Mace Security go up and down completely randomly.
Pair Corralation between Bank of America and Mace Security
If you would invest 4,231 in Bank of America on August 31, 2024 and sell it today you would earn a total of 546.00 from holding Bank of America or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Bank of America vs. Mace Security Intl
Performance |
| Timeline |
| Bank of America |
| Mace Security Intl |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and Mace Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Mace Security
The main advantage of trading using opposite Bank of America and Mace Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Mace Security 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 Mace Security will offset losses from the drop in Mace Security's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| Mace Security vs. CompX International | Mace Security vs. Mistras Group | Mace Security vs. MSA Safety | Mace Security vs. Brinks Company |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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