Correlation Between Bank of New York and Logan Ridge

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

Diversification Opportunities for Bank of New York and Logan Ridge

BankLoganDiversified AwayBankLoganDiversified Away100%
0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Bank and Logan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank of New and Logan Ridge Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logan Ridge Finance 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 Logan Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logan Ridge Finance has no effect on the direction of Bank of New York i.e., Bank of New York and Logan Ridge go up and down completely randomly.

Pair Corralation between Bank of New York and Logan Ridge

Allowing for the 90-day total investment horizon Bank of New is expected to under-perform the Logan Ridge. But the stock apears to be less risky and, when comparing its historical volatility, Bank of New is 1.02 times less risky than Logan Ridge. The stock trades about -0.01 of its potential returns per unit of risk. The Logan Ridge Finance is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,389  in Logan Ridge Finance on October 14, 2024 and sell it today you would earn a total of  11.00  from holding Logan Ridge Finance or generate 0.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Bank of New  vs.  Logan Ridge Finance

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 0510
JavaScript chart by amCharts 3.21.15BK LRFC
       Timeline  
Bank of New York 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bank of New has generated negative risk-adjusted returns adding no value to investors with long positions. 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan7576777879808182
Logan Ridge Finance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Logan Ridge Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Logan Ridge is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan23.52424.52525.526

Bank of New York and Logan Ridge Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.67-2.75-1.83-0.910.00.91.862.813.764.71 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15BK LRFC
       Returns  

Pair Trading with Bank of New York and Logan Ridge

The main advantage of trading using opposite Bank of New York and Logan Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York position performs unexpectedly, Logan Ridge 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 Logan Ridge will offset losses from the drop in Logan Ridge's long position.
The idea behind Bank of New and Logan Ridge Finance 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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