Correlation Between Bank of New York and Ally Financial
Can any of the company-specific risk be diversified away by investing in both Bank of New York and Ally Financial 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 New York and Ally Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of New and Ally Financial, you can compare the effects of market volatilities on Bank of New York and Ally Financial 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 New York with a short position of Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York and Ally Financial.
Diversification Opportunities for Bank of New York and Ally Financial
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Ally is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bank of New and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial and Bank of New York 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 New are associated (or correlated) with Ally Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Financial has no effect on the direction of Bank of New York i.e., Bank of New York and Ally Financial go up and down completely randomly.
Pair Corralation between Bank of New York and Ally Financial
Allowing for the 90-day total investment horizon Bank of New York is expected to generate 2.09 times less return on investment than Ally Financial. But when comparing it to its historical volatility, Bank of New is 2.03 times less risky than Ally Financial. It trades about 0.15 of its potential returns per unit of risk. Ally Financial is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,442 in Ally Financial on August 23, 2024 and sell it today you would earn a total of 277.00 from holding Ally Financial or generate 8.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of New vs. Ally Financial
Performance |
| Timeline |
| Bank of New York |
| Ally Financial |
Bank of New York and Ally Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of New York and Ally Financial
The main advantage of trading using opposite Bank of New York and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York position performs unexpectedly, Ally Financial 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 Ally Financial will offset losses from the drop in Ally Financial's long position.| Bank of New York vs. Northern Trust | Bank of New York vs. Invesco Plc | Bank of New York vs. Franklin Resources | Bank of New York vs. T Rowe Price |
| Ally Financial vs. Small Cap Core | Ally Financial vs. Morningstar Unconstrained Allocation | Ally Financial vs. Mutual Of America | Ally Financial vs. Ep Emerging Markets |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |