Correlation Between Bank of New York Mellon and State Street
Can any of the company-specific risk be diversified away by investing in both Bank of New York Mellon and State Street 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 State Street 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 State Street, you can compare the effects of market volatilities on Bank of New York Mellon and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York Mellon and State Street.
Diversification Opportunities for Bank of New York Mellon and State Street
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and State is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and State Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street has no effect on the direction of Bank of New York Mellon i.e., Bank of New York Mellon and State Street go up and down completely randomly.
Pair Corralation between Bank of New York Mellon and State Street
Assuming the 90 days horizon The Bank of is expected to generate 0.94 times more return on investment than State Street. However, The Bank of is 1.07 times less risky than State Street. It trades about 0.15 of its potential returns per unit of risk. State Street is currently generating about 0.07 per unit of risk. If you would invest 3,854 in The Bank of on August 31, 2024 and sell it today you would earn a total of 3,979 from holding The Bank of or generate 103.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Bank of vs. State Street
Performance |
| Timeline |
| Bank of New York Mellon |
| State Street |
Bank of New York Mellon and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of New York Mellon and State Street
The main advantage of trading using opposite Bank of New York Mellon and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York Mellon position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Bank of New York Mellon vs. BURLINGTON STORES | Bank of New York Mellon vs. ELECTRONIC ARTS | Bank of New York Mellon vs. Methode Electronics | Bank of New York Mellon vs. PICKN PAY STORES |
| State Street vs. Ameriprise Financial | State Street vs. Ares Management Corp | State Street vs. Superior Plus Corp | State Street vs. NMI Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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