Correlation Between Bank of America and MGC Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Bank of America and MGC Pharmaceuticals 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 MGC Pharmaceuticals 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 MGC Pharmaceuticals, you can compare the effects of market volatilities on Bank of America and MGC Pharmaceuticals 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 MGC Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and MGC Pharmaceuticals.
Diversification Opportunities for Bank of America and MGC Pharmaceuticals
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and MGC is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and MGC Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGC Pharmaceuticals 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 MGC Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGC Pharmaceuticals has no effect on the direction of Bank of America i.e., Bank of America and MGC Pharmaceuticals go up and down completely randomly.
Pair Corralation between Bank of America and MGC Pharmaceuticals
Considering the 90-day investment horizon Bank of America is expected to generate 25.58 times less return on investment than MGC Pharmaceuticals. But when comparing it to its historical volatility, Bank of America is 33.3 times less risky than MGC Pharmaceuticals. It trades about 0.06 of its potential returns per unit of risk. MGC Pharmaceuticals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.78 in MGC Pharmaceuticals on August 30, 2024 and sell it today you would earn a total of 20.22 from holding MGC Pharmaceuticals or generate 2592.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 80.2% |
| Values | Daily Returns |
Bank of America vs. MGC Pharmaceuticals
Performance |
| Timeline |
| Bank of America |
| MGC Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and MGC Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and MGC Pharmaceuticals
The main advantage of trading using opposite Bank of America and MGC Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, MGC Pharmaceuticals 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 MGC Pharmaceuticals will offset losses from the drop in MGC Pharmaceuticals' long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. JPMorgan Chase Co |
| MGC Pharmaceuticals vs. Target Group | MGC Pharmaceuticals vs. Aequus Pharmaceuticals | MGC Pharmaceuticals vs. Filament Health Corp | MGC Pharmaceuticals vs. Sky Century Investment |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |