Correlation Between Bank of America and IQ MacKay
Can any of the company-specific risk be diversified away by investing in both Bank of America and IQ MacKay 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 IQ MacKay 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 IQ MacKay Municipal, you can compare the effects of market volatilities on Bank of America and IQ MacKay 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 IQ MacKay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and IQ MacKay.
Diversification Opportunities for Bank of America and IQ MacKay
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and MMIN is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and IQ MacKay Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ MacKay Municipal 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 IQ MacKay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ MacKay Municipal has no effect on the direction of Bank of America i.e., Bank of America and IQ MacKay go up and down completely randomly.
Pair Corralation between Bank of America and IQ MacKay
Considering the 90-day investment horizon Bank of America is expected to generate 4.85 times more return on investment than IQ MacKay. However, Bank of America is 4.85 times more volatile than IQ MacKay Municipal. It trades about 0.24 of its potential returns per unit of risk. IQ MacKay Municipal is currently generating about 0.08 per unit of risk. If you would invest 4,262 in Bank of America on August 27, 2024 and sell it today you would earn a total of 438.00 from holding Bank of America or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. IQ MacKay Municipal
Performance |
| Timeline |
| Bank of America |
| IQ MacKay Municipal |
Bank of America and IQ MacKay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and IQ MacKay
The main advantage of trading using opposite Bank of America and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, IQ MacKay 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 IQ MacKay will offset losses from the drop in IQ MacKay'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 |
| IQ MacKay vs. Franklin Liberty Intermediate | IQ MacKay vs. Hartford Municipal Opportunities | IQ MacKay vs. IQ MacKay Municipal |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |