Correlation Between Bank of New York Mellon and Bright Horizons
Can any of the company-specific risk be diversified away by investing in both Bank of New York Mellon and Bright Horizons 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 Mellon and Bright Horizons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Bank of and Bright Horizons Family, you can compare the effects of market volatilities on Bank of New York Mellon and Bright Horizons 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 Mellon with a short position of Bright Horizons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York Mellon and Bright Horizons.
Diversification Opportunities for Bank of New York Mellon and Bright Horizons
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Bright is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and Bright Horizons Family in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Horizons Family and Bank of New York Mellon 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 The Bank of are associated (or correlated) with Bright Horizons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Horizons Family has no effect on the direction of Bank of New York Mellon i.e., Bank of New York Mellon and Bright Horizons go up and down completely randomly.
Pair Corralation between Bank of New York Mellon and Bright Horizons
Assuming the 90 days horizon Bank of New York Mellon is expected to generate 1.3 times less return on investment than Bright Horizons. In addition to that, Bank of New York Mellon is 1.27 times more volatile than Bright Horizons Family. It trades about 0.29 of its total potential returns per unit of risk. Bright Horizons Family is currently generating about 0.47 per unit of volatility. If you would invest 10,300 in Bright Horizons Family on October 22, 2024 and sell it today you would earn a total of 1,100 from holding Bright Horizons Family or generate 10.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Bank of vs. Bright Horizons Family
Performance |
| Timeline |
| Bank of New York Mellon |
| Bright Horizons Family |
Bank of New York Mellon and Bright Horizons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of New York Mellon and Bright Horizons
The main advantage of trading using opposite Bank of New York Mellon and Bright Horizons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York Mellon position performs unexpectedly, Bright Horizons 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 Bright Horizons will offset losses from the drop in Bright Horizons' long position.| Bank of New York Mellon vs. HOCHSCHILD MINING | Bank of New York Mellon vs. Gol Intelligent Airlines | Bank of New York Mellon vs. GameStop Corp | Bank of New York Mellon vs. MOVIE GAMES SA |
| Bright Horizons vs. INTERCONT HOTELS | Bright Horizons vs. Sunstone Hotel Investors | Bright Horizons vs. Ringmetall SE | Bright Horizons vs. Stag Industrial |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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