Correlation Between Bank of America and Mars Acquisition
Can any of the company-specific risk be diversified away by investing in both Bank of America and Mars 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 Mars 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 Mars Acquisition Corp, you can compare the effects of market volatilities on Bank of America and Mars 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 Mars Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Mars Acquisition.
Diversification Opportunities for Bank of America and Mars Acquisition
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Mars is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Mars Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mars 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 Mars Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mars Acquisition Corp has no effect on the direction of Bank of America i.e., Bank of America and Mars Acquisition go up and down completely randomly.
Pair Corralation between Bank of America and Mars Acquisition
If you would invest 220.00 in Mars Acquisition Corp on November 28, 2024 and sell it today you would earn a total of 0.00 from holding Mars Acquisition Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Bank of America vs. Mars Acquisition Corp
Performance |
| Timeline |
| Bank of America |
| Mars Acquisition Corp |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Bank of America and Mars Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Mars Acquisition
The main advantage of trading using opposite Bank of America and Mars Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Mars 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 Mars Acquisition will offset losses from the drop in Mars Acquisition's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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