Correlation Between Bank of New York and Ashmore Group

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

Diversification Opportunities for Bank of New York and Ashmore Group

-0.64

Correlation Coefficient

Bank of New York  Ashmore Group

Excellent diversification

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

Pair Corralation between Bank of New York and Ashmore Group

Allowing for the 90-day total investment horizon The Bank of is expected to generate 1.67 times more return on investment than Ashmore Group. However, Bank of New York is 1.67 times more volatile than Ashmore Group Plc. It trades about 0.09 of its potential returns per unit of risk. Ashmore Group Plc is currently generating about -0.17 per unit of risk. If you would invest  7,792  in The Bank of on December 25, 2024 and sell it today you would earn a total of  678.00  from holding The Bank of or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	91.53%
Values	Daily Returns

The Bank of  vs.  Ashmore Group Plc

Bank of New York

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Bank of are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward-looking signals, Bank of New York may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ashmore Group Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ashmore Group Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Bank of New York and Ashmore Group

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

The idea behind The Bank of and Ashmore Group Plc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.