Correlation Between Bank of New York and Tekla Life

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

Diversification Opportunities for Bank of New York and Tekla Life

0.72

Correlation Coefficient

Bank of New York  Tekla Life

Poor diversification

The 3 months correlation between Bank and Tekla is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and Tekla Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Life Sciences 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 Tekla Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla Life Sciences has no effect on the direction of Bank of New York i.e., Bank of New York and Tekla Life go up and down completely randomly.

Pair Corralation between Bank of New York and Tekla Life

Allowing for the 90-day total investment horizon The Bank of is expected to generate 1.51 times more return on investment than Tekla Life. However, Bank of New York is 1.51 times more volatile than Tekla Life Sciences. It trades about 0.1 of its potential returns per unit of risk. Tekla Life Sciences is currently generating about -0.01 per unit of risk. If you would invest  7,792  in The Bank of on December 26, 2024 and sell it today you would earn a total of  715.00  from holding The Bank of or generate 9.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

The Bank of  vs.  Tekla Life Sciences

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.

Tekla Life Sciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tekla Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Tekla Life is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bank of New York and Tekla Life

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

The idea behind The Bank of and Tekla Life Sciences 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 Transaction History module to view history of all your transactions and understand their impact on performance.