Correlation Between Tenaris SA and Bank of America
Can any of the company-specific risk be diversified away by investing in both Tenaris SA and Bank of America 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 Tenaris SA and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tenaris SA ADR and Bank of America, you can compare the effects of market volatilities on Tenaris SA and Bank of America 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 Tenaris SA with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and Bank of America.
Diversification Opportunities for Tenaris SA and Bank of America
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tenaris and Bank is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America and Tenaris SA 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 Tenaris SA ADR are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Tenaris SA i.e., Tenaris SA and Bank of America go up and down completely randomly.
Pair Corralation between Tenaris SA and Bank of America
Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 3.14 times more return on investment than Bank of America. However, Tenaris SA is 3.14 times more volatile than Bank of America. It trades about 0.08 of its potential returns per unit of risk. Bank of America is currently generating about 0.06 per unit of risk. If you would invest 3,223 in Tenaris SA ADR on August 28, 2024 and sell it today you would earn a total of 544.00 from holding Tenaris SA ADR or generate 16.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tenaris SA ADR vs. Bank of America
Performance |
| Timeline |
| Tenaris SA ADR |
| Bank of America |
Tenaris SA and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenaris SA and Bank of America
The main advantage of trading using opposite Tenaris SA and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Tenaris SA vs. TechnipFMC PLC | Tenaris SA vs. Now Inc | Tenaris SA vs. ChampionX | Tenaris SA vs. Baker Hughes Co |
| Bank of America vs. Bank of America | Bank of America vs. Bank of America | Bank of America vs. China Construction Bank | Bank of America vs. Bank of America |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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