Correlation Between Bank of America and Pampa Energia
Can any of the company-specific risk be diversified away by investing in both Bank of America and Pampa Energia 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 Pampa Energia 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 Pampa Energia SA, you can compare the effects of market volatilities on Bank of America and Pampa Energia 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 Pampa Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Pampa Energia.
Diversification Opportunities for Bank of America and Pampa Energia
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Pampa is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Pampa Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Energia SA 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 Pampa Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Energia SA has no effect on the direction of Bank of America i.e., Bank of America and Pampa Energia go up and down completely randomly.
Pair Corralation between Bank of America and Pampa Energia
Considering the 90-day investment horizon Bank of America is expected to generate 1.9 times less return on investment than Pampa Energia. In addition to that, Bank of America is 1.12 times more volatile than Pampa Energia SA. It trades about 0.26 of its total potential returns per unit of risk. Pampa Energia SA is currently generating about 0.56 per unit of volatility. If you would invest 6,700 in Pampa Energia SA on August 28, 2024 and sell it today you would earn a total of 1,563 from holding Pampa Energia SA or generate 23.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Pampa Energia SA
Performance |
| Timeline |
| Bank of America |
| Pampa Energia SA |
Bank of America and Pampa Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Pampa Energia
The main advantage of trading using opposite Bank of America and Pampa Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Pampa Energia 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 Pampa Energia will offset losses from the drop in Pampa Energia's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal | Bank of America vs. Bank of Nova |
| Pampa Energia vs. Grupo Financiero Galicia | Pampa Energia vs. Banco Macro SA | Pampa Energia vs. Empresa Distribuidora y | Pampa Energia vs. Transportadora de Gas |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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