Correlation Between Bank of New York and Royal Bank

Can any of the company-specific risk be diversified away by investing in both Bank of New York and Royal Bank 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 Royal Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Bank of and Royal Bank of, you can compare the effects of market volatilities on Bank of New York and Royal Bank 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 Royal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York and Royal Bank.

Diversification Opportunities for Bank of New York and Royal Bank

0.82

Correlation Coefficient

Bank of New York  Royal Bank

Very poor diversification

The 3 months correlation between Bank and Royal is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and Royal Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Bank 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 The Bank of are associated (or correlated) with Royal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Bank has no effect on the direction of Bank of New York i.e., Bank of New York and Royal Bank go up and down completely randomly.

Pair Corralation between Bank of New York and Royal Bank

Allowing for the 90-day total investment horizon The Bank of is expected to generate 1.23 times more return on investment than Royal Bank. However, Bank of New York is 1.23 times more volatile than Royal Bank of. It trades about 0.33 of its potential returns per unit of risk. Royal Bank of is currently generating about 0.17 per unit of risk. If you would invest  8,247  in The Bank of on May 6, 2025 and sell it today you would earn a total of  1,894  from holding The Bank of or generate 22.97% return on investment over 90 days.

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

The Bank of  vs.  Royal Bank of

Bank of New York

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Bank of are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward-looking signals, Bank of New York disclosed solid returns over the last few months and may actually be approaching a breakup point.

Royal Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Bank of are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Royal Bank may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Bank of New York and Royal Bank

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

The idea behind The Bank of and Royal Bank of 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.