Correlation Between Bank of America and Mainstay
Can any of the company-specific risk be diversified away by investing in both Bank of America and Mainstay 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 Mainstay 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 Mainstay Sp 500, you can compare the effects of market volatilities on Bank of America and Mainstay 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 Mainstay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Mainstay.
Diversification Opportunities for Bank of America and Mainstay
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Mainstay is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Mainstay Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Sp 500 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 Mainstay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Sp 500 has no effect on the direction of Bank of America i.e., Bank of America and Mainstay go up and down completely randomly.
Pair Corralation between Bank of America and Mainstay
Considering the 90-day investment horizon Bank of America is expected to generate 2.38 times more return on investment than Mainstay. However, Bank of America is 2.38 times more volatile than Mainstay Sp 500. It trades about 0.26 of its potential returns per unit of risk. Mainstay Sp 500 is currently generating about 0.16 per unit of risk. If you would invest 4,262 in Bank of America on August 28, 2024 and sell it today you would earn a total of 488.00 from holding Bank of America or generate 11.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Mainstay Sp 500
Performance |
| Timeline |
| Bank of America |
| Mainstay Sp 500 |
Bank of America and Mainstay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Mainstay
The main advantage of trading using opposite Bank of America and Mainstay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Mainstay 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 Mainstay will offset losses from the drop in Mainstay's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal | Bank of America vs. Bank of Nova |
| Mainstay vs. Qs Large Cap | Mainstay vs. Omni Small Cap Value | Mainstay vs. Ab Global Risk | Mainstay vs. Small Cap Stock |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |