Correlation Between Bank of America and Mfs Utilities
Can any of the company-specific risk be diversified away by investing in both Bank of America and Mfs Utilities 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 Mfs Utilities 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 Mfs Utilities Fund, you can compare the effects of market volatilities on Bank of America and Mfs Utilities 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 Mfs Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Mfs Utilities.
Diversification Opportunities for Bank of America and Mfs Utilities
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Mfs is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Mfs Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Utilities 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 Mfs Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Utilities has no effect on the direction of Bank of America i.e., Bank of America and Mfs Utilities go up and down completely randomly.
Pair Corralation between Bank of America and Mfs Utilities
Considering the 90-day investment horizon Bank of America is expected to generate 1.76 times more return on investment than Mfs Utilities. However, Bank of America is 1.76 times more volatile than Mfs Utilities Fund. It trades about 0.1 of its potential returns per unit of risk. Mfs Utilities Fund is currently generating about 0.11 per unit of risk. If you would invest 3,883 in Bank of America on August 26, 2024 and sell it today you would earn a total of 817.00 from holding Bank of America or generate 21.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Mfs Utilities Fund
Performance |
| Timeline |
| Bank of America |
| Mfs Utilities |
Bank of America and Mfs Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Mfs Utilities
The main advantage of trading using opposite Bank of America and Mfs Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Mfs Utilities 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 Mfs Utilities will offset losses from the drop in Mfs Utilities' 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 |
| Mfs Utilities vs. Locorr Longshort Modities | Mfs Utilities vs. Short Intermediate Bond Fund | Mfs Utilities vs. Guggenheim Long Short | Mfs Utilities vs. Astor Longshort Fund |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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