Correlation Between Bank of New York and Sofina Société

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

Diversification Opportunities for Bank of New York and Sofina Société

-0.72

Correlation Coefficient

Bank of New York  Sofina Société

Pay attention - limited upside

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

Pair Corralation between Bank of New York and Sofina Société

Allowing for the 90-day total investment horizon Bank of New is expected to under-perform the Sofina Société. In addition to that, Bank of New York is 113.36 times more volatile than Sofina Socit Anonyme. It trades about -0.15 of its total potential returns per unit of risk. Sofina Socit Anonyme is currently generating about 0.22 per unit of volatility. If you would invest  22,890  in Sofina Socit Anonyme on October 5, 2024 and sell it today you would earn a total of  10.00  from holding Sofina Socit Anonyme or generate 0.04% return on investment over 90 days.

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

Bank of New  vs.  Sofina Socit Anonyme

Bank of New York

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of New are ranked lower than 8 (%) 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 February 2025.

Sofina Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sofina Socit Anonyme has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sofina Société is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bank of New York and Sofina Société

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

The idea behind Bank of New and Sofina Socit Anonyme 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.