Correlation Between BII Railway and New York
Can any of the company-specific risk be diversified away by investing in both BII Railway and New York 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 BII Railway and New York into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and New York Community, you can compare the effects of market volatilities on BII Railway and New York 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 BII Railway with a short position of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and New York.
Diversification Opportunities for BII Railway and New York
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BII and New is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and New York Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Community and BII Railway 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 BII Railway Transportation are associated (or correlated) with New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Community has no effect on the direction of BII Railway i.e., BII Railway and New York go up and down completely randomly.
Pair Corralation between BII Railway and New York
Assuming the 90 days horizon BII Railway Transportation is expected to under-perform the New York. But the stock apears to be less risky and, when comparing its historical volatility, BII Railway Transportation is 1.48 times less risky than New York. The stock trades about -0.04 of its potential returns per unit of risk. The New York Community is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 890.00 in New York Community on November 3, 2024 and sell it today you would earn a total of 20.00 from holding New York Community or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BII Railway Transportation vs. New York Community
Performance |
| Timeline |
| BII Railway Transpor |
| New York Community |
BII Railway and New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and New York
The main advantage of trading using opposite BII Railway and New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, New York 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 New York will offset losses from the drop in New York's long position.| BII Railway vs. Accenture plc | BII Railway vs. International Business Machines | BII Railway vs. International Business Machines | BII Railway vs. Capgemini SE |
| New York vs. Plastic Omnium | New York vs. GRENKELEASING Dusseldorf | New York vs. NEWELL RUBBERMAID | New York vs. VULCAN MATERIALS |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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