Correlation Between Bank of New York and Stepan
Can any of the company-specific risk be diversified away by investing in both Bank of New York and Stepan 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 Stepan 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 Stepan Company, you can compare the effects of market volatilities on Bank of New York and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York and Stepan.
Diversification Opportunities for Bank of New York and Stepan
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and Stepan is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bank of New and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Bank of New York i.e., Bank of New York and Stepan go up and down completely randomly.
Pair Corralation between Bank of New York and Stepan
Allowing for the 90-day total investment horizon Bank of New is expected to generate 0.74 times more return on investment than Stepan. However, Bank of New is 1.36 times less risky than Stepan. It trades about 0.11 of its potential returns per unit of risk. Stepan Company is currently generating about -0.03 per unit of risk. If you would invest 4,192 in Bank of New on August 30, 2024 and sell it today you would earn a total of 3,982 from holding Bank of New or generate 94.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of New vs. Stepan Company
Performance |
| Timeline |
| Bank of New York |
| Stepan Company |
Bank of New York and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of New York and Stepan
The main advantage of trading using opposite Bank of New York and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan'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 |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Stocks Directory Find actively traded stocks across global markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |