Correlation Between Bank of New York Mellon and Takkt AG
Can any of the company-specific risk be diversified away by investing in both Bank of New York Mellon and Takkt AG 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 Takkt AG 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 Takkt AG, you can compare the effects of market volatilities on Bank of New York Mellon and Takkt AG 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 Takkt AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York Mellon and Takkt AG.
Diversification Opportunities for Bank of New York Mellon and Takkt AG
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Takkt is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and Takkt AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takkt AG 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 Takkt AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takkt AG has no effect on the direction of Bank of New York Mellon i.e., Bank of New York Mellon and Takkt AG go up and down completely randomly.
Pair Corralation between Bank of New York Mellon and Takkt AG
Assuming the 90 days horizon The Bank of is expected to generate 0.73 times more return on investment than Takkt AG. However, The Bank of is 1.38 times less risky than Takkt AG. It trades about 0.25 of its potential returns per unit of risk. Takkt AG is currently generating about 0.03 per unit of risk. If you would invest 7,390 in The Bank of on October 20, 2024 and sell it today you would earn a total of 556.00 from holding The Bank of or generate 7.52% 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. Takkt AG
Performance |
| Timeline |
| Bank of New York Mellon |
| Takkt AG |
Bank of New York Mellon and Takkt AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of New York Mellon and Takkt AG
The main advantage of trading using opposite Bank of New York Mellon and Takkt AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York Mellon position performs unexpectedly, Takkt AG 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 Takkt AG will offset losses from the drop in Takkt AG's long position.The idea behind The Bank of and Takkt AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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