Correlation Between Bank of America and MAHLE Metal
Can any of the company-specific risk be diversified away by investing in both Bank of America and MAHLE Metal 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 MAHLE Metal 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 MAHLE Metal Leve, you can compare the effects of market volatilities on Bank of America and MAHLE Metal 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 MAHLE Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and MAHLE Metal.
Diversification Opportunities for Bank of America and MAHLE Metal
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and MAHLE is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and MAHLE Metal Leve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAHLE Metal Leve 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 MAHLE Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAHLE Metal Leve has no effect on the direction of Bank of America i.e., Bank of America and MAHLE Metal go up and down completely randomly.
Pair Corralation between Bank of America and MAHLE Metal
Assuming the 90 days trading horizon Bank of America is expected to generate 1.25 times more return on investment than MAHLE Metal. However, Bank of America is 1.25 times more volatile than MAHLE Metal Leve. It trades about 0.28 of its potential returns per unit of risk. MAHLE Metal Leve is currently generating about -0.28 per unit of risk. If you would invest 6,037 in Bank of America on August 24, 2024 and sell it today you would earn a total of 718.00 from holding Bank of America or generate 11.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. MAHLE Metal Leve
Performance |
| Timeline |
| Bank of America |
| MAHLE Metal Leve |
Bank of America and MAHLE Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and MAHLE Metal
The main advantage of trading using opposite Bank of America and MAHLE Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, MAHLE Metal 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 MAHLE Metal will offset losses from the drop in MAHLE Metal's long position.| Bank of America vs. BTG Pactual Logstica | Bank of America vs. Plano Plano Desenvolvimento | Bank of America vs. Companhia Habitasul de | Bank of America vs. The Procter Gamble |
| MAHLE Metal vs. Tupy SA | MAHLE Metal vs. Engie Brasil Energia | MAHLE Metal vs. Grendene SA | MAHLE Metal vs. M Dias Branco |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |