Correlation Between Bank of New York and Inflection Point

Can any of the company-specific risk be diversified away by investing in both Bank of New York and Inflection Point 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 Inflection Point into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank of New and Inflection Point Acquisition, you can compare the effects of market volatilities on Bank of New York and Inflection Point 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 Inflection Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York and Inflection Point.

Diversification Opportunities for Bank of New York and Inflection Point

0.24

Correlation Coefficient

Bank of New York  Inflection Point

Modest diversification

The 3 months correlation between Bank and Inflection is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bank of New and Inflection Point Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflection Point Acq 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 Bank of New are associated (or correlated) with Inflection Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflection Point Acq has no effect on the direction of Bank of New York i.e., Bank of New York and Inflection Point go up and down completely randomly.

Pair Corralation between Bank of New York and Inflection Point

Allowing for the 90-day total investment horizon Bank of New is expected to under-perform the Inflection Point. But the stock apears to be less risky and, when comparing its historical volatility, Bank of New is 5.42 times less risky than Inflection Point. The stock trades about -0.15 of its potential returns per unit of risk. The Inflection Point Acquisition is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,345  in Inflection Point Acquisition on October 10, 2024 and sell it today you would lose (5.00) from holding Inflection Point Acquisition or give up 0.37% of portfolio value over 90 days.

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

Bank of New  vs.  Inflection Point Acquisition

Bank of New York

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of New are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Bank of New York is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Inflection Point Acq

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inflection Point Acquisition are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Inflection Point unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of New York and Inflection Point

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

The idea behind Bank of New and Inflection Point Acquisition 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.