Correlation Between Bank of New York and Bain Capital

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

Diversification Opportunities for Bank of New York and Bain Capital

0.5

Correlation Coefficient

Bank of New York  Bain Capital

Very weak diversification

The 3 months correlation between Bank and Bain is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bank of New and Bain Capital Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bain Capital Specialty 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 Bain Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bain Capital Specialty has no effect on the direction of Bank of New York i.e., Bank of New York and Bain Capital go up and down completely randomly.

Pair Corralation between Bank of New York and Bain Capital

Allowing for the 90-day total investment horizon Bank of New York is expected to generate 6.77 times less return on investment than Bain Capital. In addition to that, Bank of New York is 2.02 times more volatile than Bain Capital Specialty. It trades about 0.02 of its total potential returns per unit of risk. Bain Capital Specialty is currently generating about 0.21 per unit of volatility. If you would invest  1,534  in Bain Capital Specialty on January 20, 2024 and sell it today you would earn a total of  42.00  from holding Bain Capital Specialty or generate 2.74% return on investment over 90 days.

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

Bank of New  vs.  Bain Capital Specialty

Bank of New York

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of New are ranked lower than 1 (%) 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.

Bain Capital Specialty

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bain Capital Specialty are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Bain Capital 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 Bain Capital

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

The idea behind Bank of New and Bain Capital Specialty 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 CEOs Directory module to screen CEOs from public companies around the world.