Correlation Between Carlyle and Bank of New York

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Can any of the company-specific risk be diversified away by investing in both Carlyle and Bank of New York 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 Carlyle and Bank of New York into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlyle Group and Bank Of New, you can compare the effects of market volatilities on Carlyle and Bank of New York 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 Carlyle with a short position of Bank of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle and Bank of New York.

Diversification Opportunities for Carlyle and Bank of New York

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Carlyle and Bank is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Bank Of New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of New York and Carlyle 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 Carlyle Group are associated (or correlated) with Bank of New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of New York has no effect on the direction of Carlyle i.e., Carlyle and Bank of New York go up and down completely randomly.

Pair Corralation between Carlyle and Bank of New York

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 1.51 times more return on investment than Bank of New York. However, Carlyle is 1.51 times more volatile than Bank Of New. It trades about 0.16 of its potential returns per unit of risk. Bank Of New is currently generating about 0.19 per unit of risk. If you would invest  4,482  in Carlyle Group on December 29, 2023 and sell it today you would earn a total of  209.00  from holding Carlyle Group or generate 4.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Carlyle Group  vs.  Bank Of New

 Performance 
       Timeline  
Carlyle Group 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Carlyle reported solid returns over the last few months and may actually be approaching a breakup point.
Bank of New York 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Bank Of New are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent forward-looking signals, Bank of New York may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Carlyle and Bank of New York Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Carlyle and Bank of New York

The main advantage of trading using opposite Carlyle and Bank of New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle position performs unexpectedly, Bank of New York 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 Bank of New York will offset losses from the drop in Bank of New York's long position.
The idea behind Carlyle Group and Bank Of New 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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