Correlation Between Bank of New York and Fidelity Total

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

Diversification Opportunities for Bank of New York and Fidelity Total

  Correlation Coefficient

Poor diversification

The 3 months correlation between Bank of New York and Fidelity is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of New and Fidelity Total Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Total Market 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 Fidelity Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Total Market has no effect on the direction of Bank of New York i.e., Bank of New York and Fidelity Total go up and down completely randomly.

Pair Corralation between Bank of New York and Fidelity Total

Allowing for the 90-day total investment horizon Bank Of New is expected to generate 1.63 times more return on investment than Fidelity Total. However, Bank of New York is 1.63 times more volatile than Fidelity Total Market. It trades about 0.27 of its potential returns per unit of risk. Fidelity Total Market is currently generating about 0.43 per unit of risk. If you would invest  4,010  in Bank Of New on May 15, 2022 and sell it today you would earn a total of  480.00  from holding Bank Of New or generate 11.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

Bank Of New  vs.  Fidelity Total Market

 Performance (%) 
Bank of New York 
Bank of New York Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bank Of New are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, Bank of New York is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Bank of New York Price Channel

Fidelity Total Market 
Fidelity Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Total Market are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Total may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Fidelity Price Channel

Bank of New York and Fidelity Total Volatility Contrast

   Predicted Return Density   

Pair Trading with Bank of New York and Fidelity Total

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

Bank Of New

Pair trading matchups for Bank of New York

The idea behind Bank Of New and Fidelity Total Market 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.

Fidelity Total Market

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Fidelity Total as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Fidelity Total's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Fidelity Total's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Fidelity Total Market.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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