Correlation Between Bank of New York Mellon and EQT AB

Can any of the company-specific risk be diversified away by investing in both Bank of New York Mellon and EQT AB 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 EQT AB 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 EQT AB, you can compare the effects of market volatilities on Bank of New York Mellon and EQT AB 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 EQT AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York Mellon and EQT AB.

Diversification Opportunities for Bank of New York Mellon and EQT AB

-0.64

Correlation Coefficient

Bank of New York Mellon  EQT AB

Excellent diversification

The 3 months correlation between Bank and EQT is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and EQT AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQT AB 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 EQT AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQT AB has no effect on the direction of Bank of New York Mellon i.e., Bank of New York Mellon and EQT AB go up and down completely randomly.

Pair Corralation between Bank of New York Mellon and EQT AB

Assuming the 90 days horizon The Bank of is expected to generate 0.62 times more return on investment than EQT AB. However, The Bank of is 1.61 times less risky than EQT AB. It trades about 0.28 of its potential returns per unit of risk. EQT AB is currently generating about 0.04 per unit of risk. If you would invest  6,132  in The Bank of on September 3, 2024 and sell it today you would earn a total of  1,673  from holding The Bank of or generate 27.28% 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.  EQT AB

Bank of New York Mellon

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Bank of are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bank of New York Mellon reported solid returns over the last few months and may actually be approaching a breakup point.

EQT AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EQT AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, EQT AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bank of New York Mellon and EQT AB

The main advantage of trading using opposite Bank of New York Mellon and EQT AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York Mellon position performs unexpectedly, EQT AB 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 EQT AB will offset losses from the drop in EQT AB's long position.

The idea behind The Bank of and EQT AB 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.