Correlation Between Bank of America and PUMA ENERGY
Can any of the company-specific risk be diversified away by investing in both Bank of America and PUMA 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 PUMA 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 PUMA ENERGY ZAMBIA, you can compare the effects of market volatilities on Bank of America and PUMA 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 PUMA ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and PUMA ENERGY.
Diversification Opportunities for Bank of America and PUMA ENERGY
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and PUMA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and PUMA ENERGY ZAMBIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PUMA ENERGY ZAMBIA 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 PUMA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PUMA ENERGY ZAMBIA has no effect on the direction of Bank of America i.e., Bank of America and PUMA ENERGY go up and down completely randomly.
Pair Corralation between Bank of America and PUMA ENERGY
Considering the 90-day investment horizon Bank of America is expected to generate 2.15 times less return on investment than PUMA ENERGY. But when comparing it to its historical volatility, Bank of America is 1.28 times less risky than PUMA ENERGY. It trades about 0.08 of its potential returns per unit of risk. PUMA ENERGY ZAMBIA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 180.00 in PUMA ENERGY ZAMBIA on December 1, 2024 and sell it today you would earn a total of 399.00 from holding PUMA ENERGY ZAMBIA or generate 221.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.99% |
| Values | Daily Returns |
Bank of America vs. PUMA ENERGY ZAMBIA
Performance |
| Timeline |
| Bank of America |
| PUMA ENERGY ZAMBIA |
Bank of America and PUMA ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and PUMA ENERGY
The main advantage of trading using opposite Bank of America and PUMA ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, PUMA 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 PUMA ENERGY will offset losses from the drop in PUMA 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 |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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