Correlation Between International Consolidated and Bank of New York Mellon
Can any of the company-specific risk be diversified away by investing in both International Consolidated and Bank of New York Mellon 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 International Consolidated and Bank of New York Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and The Bank of, you can compare the effects of market volatilities on International Consolidated and Bank of New York Mellon 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 International Consolidated with a short position of Bank of New York Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Bank of New York Mellon.
Diversification Opportunities for International Consolidated and Bank of New York Mellon
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between International and Bank is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of New York Mellon and International Consolidated 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 International Consolidated Airlines are associated (or correlated) with Bank of New York Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of New York Mellon has no effect on the direction of International Consolidated i.e., International Consolidated and Bank of New York Mellon go up and down completely randomly.
Pair Corralation between International Consolidated and Bank of New York Mellon
Assuming the 90 days horizon International Consolidated Airlines is expected to generate 1.8 times more return on investment than Bank of New York Mellon. However, International Consolidated is 1.8 times more volatile than The Bank of. It trades about 0.31 of its potential returns per unit of risk. The Bank of is currently generating about 0.33 per unit of risk. If you would invest 253.00 in International Consolidated Airlines on September 5, 2024 and sell it today you would earn a total of 52.00 from holding International Consolidated Airlines or generate 20.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. The Bank of
Performance |
| Timeline |
| International Consolidated |
| Bank of New York Mellon |
International Consolidated and Bank of New York Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Bank of New York Mellon
The main advantage of trading using opposite International Consolidated and Bank of New York Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Bank of New York Mellon 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 Bank of New York Mellon will offset losses from the drop in Bank of New York Mellon's long position.| International Consolidated vs. Delta Air Lines | International Consolidated vs. AIR CHINA LTD | International Consolidated vs. RYANAIR HLDGS ADR | International Consolidated vs. China Southern Airlines |
| Bank of New York Mellon vs. LG Display Co | Bank of New York Mellon vs. USWE SPORTS AB | Bank of New York Mellon vs. International Consolidated Airlines | Bank of New York Mellon vs. ePlay Digital |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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