Correlation Between BNK Banking and Toys R

Can any of the company-specific risk be diversified away by investing in both BNK Banking and Toys R 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 BNK Banking and Toys R into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BNK Banking and Toys R Us, you can compare the effects of market volatilities on BNK Banking and Toys R 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 BNK Banking with a short position of Toys R. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNK Banking and Toys R.

Diversification Opportunities for BNK Banking and Toys R

0.71

Correlation Coefficient

BNK Banking  Toys R

Poor diversification

The 3 months correlation between BNK and Toys is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding BNK Banking and Toys R Us in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toys R Us and BNK Banking 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 BNK Banking are associated (or correlated) with Toys R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toys R Us has no effect on the direction of BNK Banking i.e., BNK Banking and Toys R go up and down completely randomly.

Pair Corralation between BNK Banking and Toys R

Assuming the 90 days trading horizon BNK Banking is expected to generate 0.76 times more return on investment than Toys R. However, BNK Banking is 1.31 times less risky than Toys R. It trades about 0.0 of its potential returns per unit of risk. Toys R Us is currently generating about -0.14 per unit of risk. If you would invest  34.00  in BNK Banking on September 14, 2024 and sell it today you would lose (1.00) from holding BNK Banking or give up 2.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

BNK Banking  vs.  Toys R Us

BNK Banking

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNK Banking has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, BNK Banking is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Toys R Us

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toys R Us has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BNK Banking and Toys R

The main advantage of trading using opposite BNK Banking and Toys R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNK Banking position performs unexpectedly, Toys R 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 Toys R will offset losses from the drop in Toys R's long position.

The idea behind BNK Banking and Toys R Us 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.