Correlation Between Bank of America and ENCE Energa
Can any of the company-specific risk be diversified away by investing in both Bank of America and ENCE Energa 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 ENCE Energa 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 ENCE Energa y, you can compare the effects of market volatilities on Bank of America and ENCE Energa 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 ENCE Energa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and ENCE Energa.
Diversification Opportunities for Bank of America and ENCE Energa
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and ENCE is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and ENCE Energa y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENCE Energa y 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 ENCE Energa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENCE Energa y has no effect on the direction of Bank of America i.e., Bank of America and ENCE Energa go up and down completely randomly.
Pair Corralation between Bank of America and ENCE Energa
Considering the 90-day investment horizon Bank of America is expected to generate 0.79 times more return on investment than ENCE Energa. However, Bank of America is 1.27 times less risky than ENCE Energa. It trades about 0.05 of its potential returns per unit of risk. ENCE Energa y is currently generating about 0.03 per unit of risk. If you would invest 3,278 in Bank of America on August 24, 2024 and sell it today you would earn a total of 1,431 from holding Bank of America or generate 43.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.22% |
| Values | Daily Returns |
Bank of America vs. ENCE Energa y
Performance |
| Timeline |
| Bank of America |
| ENCE Energa y |
Bank of America and ENCE Energa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and ENCE Energa
The main advantage of trading using opposite Bank of America and ENCE Energa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, ENCE Energa 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 ENCE Energa will offset losses from the drop in ENCE Energa's long position.| Bank of America vs. Amtech Systems | Bank of America vs. Gold Fields Ltd | Bank of America vs. Aegean Airlines SA | Bank of America vs. Merck Company |
| ENCE Energa vs. Acerinox | ENCE Energa vs. CIE Automotive SA | ENCE Energa vs. Mapfre | ENCE Energa vs. ArcelorMittal SA |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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