Correlation Between Bank of New York and Radcom

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

Diversification Opportunities for Bank of New York and Radcom

BankRadcomDiversified AwayBankRadcomDiversified Away100%
0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Bank and Radcom is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bank of New and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom 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 Radcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radcom has no effect on the direction of Bank of New York i.e., Bank of New York and Radcom go up and down completely randomly.

Pair Corralation between Bank of New York and Radcom

Allowing for the 90-day total investment horizon Bank of New York is expected to generate 2.99 times less return on investment than Radcom. But when comparing it to its historical volatility, Bank of New is 3.08 times less risky than Radcom. It trades about 0.09 of its potential returns per unit of risk. Radcom is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,054  in Radcom on October 8, 2024 and sell it today you would earn a total of  161.00  from holding Radcom or generate 15.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Bank of New  vs.  Radcom

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 05101520
JavaScript chart by amCharts 3.21.15BK RDCM
       Timeline  
Bank of New York 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan7476788082
Radcom 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Radcom are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Radcom displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1010.51111.51212.5

Bank of New York and Radcom Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.41-2.56-1.7-0.840.00.891.82.713.62 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15BK RDCM
       Returns  

Pair Trading with Bank of New York and Radcom

The main advantage of trading using opposite Bank of New York and Radcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York position performs unexpectedly, Radcom 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 Radcom will offset losses from the drop in Radcom's long position.
The idea behind Bank of New and Radcom 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.
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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