Correlation Between Bank of New York Mellon and ITV Plc
Can any of the company-specific risk be diversified away by investing in both Bank of New York Mellon and ITV Plc 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 ITV Plc 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 ITV plc, you can compare the effects of market volatilities on Bank of New York Mellon and ITV Plc 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 ITV Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York Mellon and ITV Plc.
Diversification Opportunities for Bank of New York Mellon and ITV Plc
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and ITV is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and ITV plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV plc 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 ITV Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITV plc has no effect on the direction of Bank of New York Mellon i.e., Bank of New York Mellon and ITV Plc go up and down completely randomly.
Pair Corralation between Bank of New York Mellon and ITV Plc
Assuming the 90 days horizon The Bank of is expected to generate 0.52 times more return on investment than ITV Plc. However, The Bank of is 1.94 times less risky than ITV Plc. It trades about 0.15 of its potential returns per unit of risk. ITV plc is currently generating about 0.05 per unit of risk. If you would invest 4,918 in The Bank of on October 20, 2024 and sell it today you would earn a total of 3,028 from holding The Bank of or generate 61.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
The Bank of vs. ITV plc
Performance |
| Timeline |
| Bank of New York Mellon |
| ITV plc |
Bank of New York Mellon and ITV Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of New York Mellon and ITV Plc
The main advantage of trading using opposite Bank of New York Mellon and ITV Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York Mellon position performs unexpectedly, ITV Plc 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 ITV Plc will offset losses from the drop in ITV Plc's long position.| Bank of New York Mellon vs. JD SPORTS FASH | Bank of New York Mellon vs. Forsys Metals Corp | Bank of New York Mellon vs. Ribbon Communications | Bank of New York Mellon vs. SOCKET MOBILE NEW |
| ITV Plc vs. VIVENDI UNSPONARD EO | ITV Plc vs. News Corporation | ITV Plc vs. News Corporation | ITV Plc vs. RTL Group SA |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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