Correlation Between Bank of New York and Moodys
Can any of the company-specific risk be diversified away by investing in both Bank of New York and Moodys 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 Moodys 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 Moodys, you can compare the effects of market volatilities on Bank of New York and Moodys 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 Moodys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York and Moodys.
Diversification Opportunities for Bank of New York and Moodys
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Moodys is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bank of New and Moodys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moodys 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 Moodys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moodys has no effect on the direction of Bank of New York i.e., Bank of New York and Moodys go up and down completely randomly.
Pair Corralation between Bank of New York and Moodys
Allowing for the 90-day total investment horizon Bank of New York is expected to generate 1.14 times less return on investment than Moodys. In addition to that, Bank of New York is 1.05 times more volatile than Moodys. It trades about 0.25 of its total potential returns per unit of risk. Moodys is currently generating about 0.3 per unit of volatility. If you would invest 46,132 in Moodys on August 28, 2024 and sell it today you would earn a total of 3,271 from holding Moodys or generate 7.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of New vs. Moodys
Performance |
| Timeline |
| Bank of New York |
| Moodys |
Bank of New York and Moodys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of New York and Moodys
The main advantage of trading using opposite Bank of New York and Moodys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York position performs unexpectedly, Moodys 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 Moodys will offset losses from the drop in Moodys' 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 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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