Correlation Between Bank of America and Companhia Energtica
Can any of the company-specific risk be diversified away by investing in both Bank of America and Companhia Energtica 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 Companhia Energtica 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 Companhia Energtica do, you can compare the effects of market volatilities on Bank of America and Companhia Energtica 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 Companhia Energtica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Companhia Energtica.
Diversification Opportunities for Bank of America and Companhia Energtica
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Companhia is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Companhia Energtica do in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energtica 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 Companhia Energtica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energtica has no effect on the direction of Bank of America i.e., Bank of America and Companhia Energtica go up and down completely randomly.
Pair Corralation between Bank of America and Companhia Energtica
Considering the 90-day investment horizon Bank of America is expected to generate 0.83 times more return on investment than Companhia Energtica. However, Bank of America is 1.21 times less risky than Companhia Energtica. It trades about 0.1 of its potential returns per unit of risk. Companhia Energtica do is currently generating about -0.09 per unit of risk. If you would invest 3,938 in Bank of America on September 1, 2024 and sell it today you would earn a total of 813.00 from holding Bank of America or generate 20.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Bank of America vs. Companhia Energtica do
Performance |
| Timeline |
| Bank of America |
| Companhia Energtica |
Bank of America and Companhia Energtica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Companhia Energtica
The main advantage of trading using opposite Bank of America and Companhia Energtica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Companhia Energtica 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 Companhia Energtica will offset losses from the drop in Companhia Energtica's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Companhia Energtica vs. CPFL Energia SA | Companhia Energtica vs. Light SA | Companhia Energtica vs. Eneva SA | Companhia Energtica vs. Companhia de Gs |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |