Correlation Between Bank of America and Melar Acquisition
Can any of the company-specific risk be diversified away by investing in both Bank of America and Melar Acquisition 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 Melar Acquisition 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 Melar Acquisition Corp, you can compare the effects of market volatilities on Bank of America and Melar Acquisition 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 Melar Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Melar Acquisition.
Diversification Opportunities for Bank of America and Melar Acquisition
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Melar is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Melar Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melar Acquisition Corp 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 Melar Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melar Acquisition Corp has no effect on the direction of Bank of America i.e., Bank of America and Melar Acquisition go up and down completely randomly.
Pair Corralation between Bank of America and Melar Acquisition
Considering the 90-day investment horizon Bank of America is expected to generate 16.05 times more return on investment than Melar Acquisition. However, Bank of America is 16.05 times more volatile than Melar Acquisition Corp. It trades about 0.35 of its potential returns per unit of risk. Melar Acquisition Corp is currently generating about 0.12 per unit of risk. If you would invest 4,133 in Bank of America on September 3, 2024 and sell it today you would earn a total of 618.00 from holding Bank of America or generate 14.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Melar Acquisition Corp
Performance |
| Timeline |
| Bank of America |
| Melar Acquisition Corp |
Bank of America and Melar Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Melar Acquisition
The main advantage of trading using opposite Bank of America and Melar Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Melar Acquisition 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 Melar Acquisition will offset losses from the drop in Melar Acquisition's long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| Melar Acquisition vs. Alpha One | Melar Acquisition vs. Manaris Corp | Melar Acquisition vs. SCOR PK | Melar Acquisition vs. Aquagold International |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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