Correlation Between Bank of America and MF Bancorp
Can any of the company-specific risk be diversified away by investing in both Bank of America and MF Bancorp 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 MF Bancorp 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 MF Bancorp, you can compare the effects of market volatilities on Bank of America and MF Bancorp 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 MF Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and MF Bancorp.
Diversification Opportunities for Bank of America and MF Bancorp
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and MFBP is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and MF Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MF Bancorp 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 MF Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MF Bancorp has no effect on the direction of Bank of America i.e., Bank of America and MF Bancorp go up and down completely randomly.
Pair Corralation between Bank of America and MF Bancorp
Considering the 90-day investment horizon Bank of America is expected to generate 1.04 times less return on investment than MF Bancorp. But when comparing it to its historical volatility, Bank of America is 1.78 times less risky than MF Bancorp. It trades about 0.13 of its potential returns per unit of risk. MF Bancorp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,283 in MF Bancorp on August 26, 2024 and sell it today you would earn a total of 616.00 from holding MF Bancorp or generate 48.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.78% |
| Values | Daily Returns |
Bank of America vs. MF Bancorp
Performance |
| Timeline |
| Bank of America |
| MF Bancorp |
Bank of America and MF Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and MF Bancorp
The main advantage of trading using opposite Bank of America and MF Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, MF Bancorp 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 MF Bancorp will offset losses from the drop in MF Bancorp's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| MF Bancorp vs. Citizens Bancshares Corp | MF Bancorp vs. Harbor Bankshares | MF Bancorp vs. United Bancorporation of | MF Bancorp vs. KS Bancorp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |