Correlation Between Bank of America and TotalEnergies
Can any of the company-specific risk be diversified away by investing in both Bank of America and TotalEnergies 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 TotalEnergies 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 TotalEnergies SE, you can compare the effects of market volatilities on Bank of America and TotalEnergies 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 TotalEnergies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and TotalEnergies.
Diversification Opportunities for Bank of America and TotalEnergies
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and TotalEnergies is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and TotalEnergies SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE 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 TotalEnergies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TotalEnergies SE has no effect on the direction of Bank of America i.e., Bank of America and TotalEnergies go up and down completely randomly.
Pair Corralation between Bank of America and TotalEnergies
If you would invest 4,231 in Bank of America on August 31, 2024 and sell it today you would earn a total of 520.00 from holding Bank of America or generate 12.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Bank of America vs. TotalEnergies SE
Performance |
| Timeline |
| Bank of America |
| TotalEnergies SE |
Bank of America and TotalEnergies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and TotalEnergies
The main advantage of trading using opposite Bank of America and TotalEnergies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, TotalEnergies 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 TotalEnergies will offset losses from the drop in TotalEnergies' long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| TotalEnergies vs. Grupo Sports World | TotalEnergies vs. Samsung Electronics Co | TotalEnergies vs. Verizon Communications | TotalEnergies vs. FIBRA Storage |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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