Correlation Between Bank of America and Tenaga Nasional
Can any of the company-specific risk be diversified away by investing in both Bank of America and Tenaga Nasional 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 Tenaga Nasional 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 Tenaga Nasional Bhd, you can compare the effects of market volatilities on Bank of America and Tenaga Nasional 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 Tenaga Nasional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Tenaga Nasional.
Diversification Opportunities for Bank of America and Tenaga Nasional
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Tenaga is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Tenaga Nasional Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaga Nasional Bhd 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 Tenaga Nasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaga Nasional Bhd has no effect on the direction of Bank of America i.e., Bank of America and Tenaga Nasional go up and down completely randomly.
Pair Corralation between Bank of America and Tenaga Nasional
Considering the 90-day investment horizon Bank of America is expected to under-perform the Tenaga Nasional. In addition to that, Bank of America is 1.41 times more volatile than Tenaga Nasional Bhd. It trades about -0.01 of its total potential returns per unit of risk. Tenaga Nasional Bhd is currently generating about 0.0 per unit of volatility. If you would invest 1,352 in Tenaga Nasional Bhd on January 14, 2025 and sell it today you would lose (30.00) from holding Tenaga Nasional Bhd or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.03% |
| Values | Daily Returns |
Bank of America vs. Tenaga Nasional Bhd
Performance |
| Timeline |
| Bank of America |
| Tenaga Nasional Bhd |
Bank of America and Tenaga Nasional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Tenaga Nasional
The main advantage of trading using opposite Bank of America and Tenaga Nasional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Tenaga Nasional 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 Tenaga Nasional will offset losses from the drop in Tenaga Nasional's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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