Correlation Between State Street and Bank of New York Mellon
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street 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 State Street and The Bank of, you can compare the effects of market volatilities on State Street 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 State Street with a short position of Bank of New York Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Bank of New York Mellon.
Diversification Opportunities for State Street and Bank of New York Mellon
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between State and Bank is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding State Street 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 State Street 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 State Street 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 State Street i.e., State Street and Bank of New York Mellon go up and down completely randomly.
Pair Corralation between State Street and Bank of New York Mellon
Assuming the 90 days horizon State Street is expected to generate 1.19 times less return on investment than Bank of New York Mellon. But when comparing it to its historical volatility, State Street is 1.08 times less risky than Bank of New York Mellon. It trades about 0.27 of its potential returns per unit of risk. The Bank of is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 7,054 in The Bank of on August 31, 2024 and sell it today you would earn a total of 779.00 from holding The Bank of or generate 11.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street vs. The Bank of
Performance |
| Timeline |
| State Street |
| Bank of New York Mellon |
State Street and Bank of New York Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Bank of New York Mellon
The main advantage of trading using opposite State Street and Bank of New York Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. Ameriprise Financial | State Street vs. Ares Management Corp | State Street vs. Superior Plus Corp | State Street vs. NMI Holdings |
| 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 |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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