Correlation Between Bank of New York and Rave Restaurant
Can any of the company-specific risk be diversified away by investing in both Bank of New York and Rave Restaurant 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 Rave Restaurant 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 Rave Restaurant Group, you can compare the effects of market volatilities on Bank of New York and Rave Restaurant 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 Rave Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York and Rave Restaurant.
Diversification Opportunities for Bank of New York and Rave Restaurant
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Rave is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and Rave Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rave Restaurant Group 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 Rave Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rave Restaurant Group has no effect on the direction of Bank of New York i.e., Bank of New York and Rave Restaurant go up and down completely randomly.
Pair Corralation between Bank of New York and Rave Restaurant
Allowing for the 90-day total investment horizon Bank of New York is expected to generate 1.18 times less return on investment than Rave Restaurant. But when comparing it to its historical volatility, The Bank of is 2.32 times less risky than Rave Restaurant. It trades about 0.09 of its potential returns per unit of risk. Rave Restaurant Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 264.00 in Rave Restaurant Group on December 26, 2024 and sell it today you would earn a total of 18.00 from holding Rave Restaurant Group or generate 6.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
The Bank of vs. Rave Restaurant Group
Performance |
Timeline |
Bank of New York |
Rave Restaurant Group |
Bank of New York and Rave Restaurant Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of New York and Rave Restaurant
The main advantage of trading using opposite Bank of New York and Rave Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York position performs unexpectedly, Rave Restaurant 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 Rave Restaurant will offset losses from the drop in Rave Restaurant's long position.Bank of New York vs. Northern Trust | Bank of New York vs. Invesco Plc | Bank of New York vs. Franklin Resources | Bank of New York vs. T Rowe Price |
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Check out your portfolio center.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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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