Correlation Between Bank of America and Baytex Energy
Can any of the company-specific risk be diversified away by investing in both Bank of America and Baytex Energy 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 Baytex Energy 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 Baytex Energy Corp, you can compare the effects of market volatilities on Bank of America and Baytex Energy 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 Baytex Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Baytex Energy.
Diversification Opportunities for Bank of America and Baytex Energy
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Baytex is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Baytex Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baytex Energy Corp 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 Baytex Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baytex Energy Corp has no effect on the direction of Bank of America i.e., Bank of America and Baytex Energy go up and down completely randomly.
Pair Corralation between Bank of America and Baytex Energy
Considering the 90-day investment horizon Bank of America is expected to generate 0.57 times more return on investment than Baytex Energy. However, Bank of America is 1.75 times less risky than Baytex Energy. It trades about 0.14 of its potential returns per unit of risk. Baytex Energy Corp is currently generating about -0.25 per unit of risk. If you would invest 4,621 in Bank of America on November 9, 2024 and sell it today you would earn a total of 153.00 from holding Bank of America or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Bank of America vs. Baytex Energy Corp
Performance |
| Timeline |
| Bank of America |
| Baytex Energy Corp |
Bank of America and Baytex Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Baytex Energy
The main advantage of trading using opposite Bank of America and Baytex Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Baytex Energy 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 Baytex Energy will offset losses from the drop in Baytex Energy'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 |
| Baytex Energy vs. MEG Energy Corp | Baytex Energy vs. Whitecap Resources | Baytex Energy vs. Athabasca Oil Corp | Baytex Energy vs. Cenovus 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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