Correlation Between Bank of America and Manganese
Can any of the company-specific risk be diversified away by investing in both Bank of America and Manganese 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 Manganese 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 Manganese X Energy, you can compare the effects of market volatilities on Bank of America and Manganese 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 Manganese. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Manganese.
Diversification Opportunities for Bank of America and Manganese
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Manganese is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Manganese X Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manganese X Energy 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 Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manganese X Energy has no effect on the direction of Bank of America i.e., Bank of America and Manganese go up and down completely randomly.
Pair Corralation between Bank of America and Manganese
Assuming the 90 days trading horizon Bank of America is expected to generate 0.2 times more return on investment than Manganese. However, Bank of America is 4.92 times less risky than Manganese. It trades about 0.12 of its potential returns per unit of risk. Manganese X Energy is currently generating about -0.05 per unit of risk. If you would invest 1,757 in Bank of America on August 28, 2024 and sell it today you would earn a total of 718.00 from holding Bank of America or generate 40.87% 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. Manganese X Energy
Performance |
| Timeline |
| Bank of America |
| Manganese X Energy |
Bank of America and Manganese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Manganese
The main advantage of trading using opposite Bank of America and Manganese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Manganese 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 Manganese will offset losses from the drop in Manganese's long position.| Bank of America vs. DelphX Capital Markets | Bank of America vs. Citadel Income | Bank of America vs. iShares Canadian HYBrid | Bank of America vs. Altagas Cum Red |
| Manganese vs. Braille Energy Systems | Manganese vs. American Manganese | Manganese vs. Lite Access Technologies | Manganese vs. Solar Alliance Energy |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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