Correlation Between Bank of America and Gran Tierra
Can any of the company-specific risk be diversified away by investing in both Bank of America and Gran Tierra 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 Gran Tierra 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 Gran Tierra Energy, you can compare the effects of market volatilities on Bank of America and Gran Tierra 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 Gran Tierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Gran Tierra.
Diversification Opportunities for Bank of America and Gran Tierra
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Gran is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Gran Tierra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gran Tierra 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 Gran Tierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gran Tierra Energy has no effect on the direction of Bank of America i.e., Bank of America and Gran Tierra go up and down completely randomly.
Pair Corralation between Bank of America and Gran Tierra
Considering the 90-day investment horizon Bank of America is expected to generate 0.48 times more return on investment than Gran Tierra. However, Bank of America is 2.08 times less risky than Gran Tierra. It trades about 0.03 of its potential returns per unit of risk. Gran Tierra Energy is currently generating about -0.03 per unit of risk. If you would invest 2,873 in Bank of America on January 6, 2025 and sell it today you would earn a total of 566.00 from holding Bank of America or generate 19.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Gran Tierra Energy
Performance |
| Timeline |
| Bank of America |
| Gran Tierra Energy |
Bank of America and Gran Tierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Gran Tierra
The main advantage of trading using opposite Bank of America and Gran Tierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Gran Tierra 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 Gran Tierra will offset losses from the drop in Gran Tierra's long position.| Bank of America vs. Barclays PLC ADR | Bank of America vs. ING Group NV | Bank of America vs. Banco Santander SA | Bank of America vs. HSBC Holdings PLC |
| Gran Tierra vs. Permian Resources | Gran Tierra vs. PEDEVCO Corp | Gran Tierra vs. Vermilion Energy | Gran Tierra vs. Ovintiv |
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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