Correlation Between Bank of New York and State Street
Can any of the company-specific risk be diversified away by investing in both Bank of New York and State Street 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 State Street 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 State Street Corp, you can compare the effects of market volatilities on Bank of New York and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York and State Street.
Diversification Opportunities for Bank of New York and State Street
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and State is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bank of New and State Street Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Corp 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Corp has no effect on the direction of Bank of New York i.e., Bank of New York and State Street go up and down completely randomly.
Pair Corralation between Bank of New York and State Street
Allowing for the 90-day total investment horizon Bank of New is expected to generate 0.91 times more return on investment than State Street. However, Bank of New is 1.1 times less risky than State Street. It trades about 0.1 of its potential returns per unit of risk. State Street Corp is currently generating about -0.03 per unit of risk. If you would invest 5,654 in Bank of New on January 25, 2024 and sell it today you would earn a total of 141.00 from holding Bank of New or generate 2.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of New vs. State Street Corp
Performance |
| Timeline |
| Bank of New York |
| State Street Corp |
Bank of New York and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of New York and State Street
The main advantage of trading using opposite Bank of New York and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Bank of New York vs. Federated Premier Municipal | Bank of New York vs. Blackrock Muniyield | Bank of New York vs. Diamond Hill Investment | Bank of New York vs. NXG NextGen Infrastructure |
| State Street vs. Invesco Plc | State Street vs. Franklin Resources | State Street vs. T Rowe Price | State Street vs. SEI Investments |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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