Correlation Between BNY Mellon and BNY Mellon

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

By analyzing existing cross correlation between BNY Mellon International and BNY Mellon Large, you can compare the effects of market volatilities on BNY Mellon and BNY Mellon 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 BNY Mellon with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNY Mellon and BNY Mellon.

Diversification Opportunities for BNY Mellon and BNY Mellon

-0.49

Correlation Coefficient

BNY Mellon  BNY Mellon

Very good diversification

The 3 months correlation between BNY and BNY is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon International and BNY Mellon Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon Large and BNY Mellon 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 BNY Mellon International are associated (or correlated) with BNY Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNY Mellon Large has no effect on the direction of BNY Mellon i.e., BNY Mellon and BNY Mellon go up and down completely randomly.

Pair Corralation between BNY Mellon and BNY Mellon

Given the investment horizon of 90 days BNY Mellon International is expected to under-perform the BNY Mellon. But the etf apears to be less risky and, when comparing its historical volatility, BNY Mellon International is 1.2 times less risky than BNY Mellon. The etf trades about -0.13 of its potential returns per unit of risk. The BNY Mellon Large is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  11,055  in BNY Mellon Large on August 29, 2024 and sell it today you would earn a total of  391.00  from holding BNY Mellon Large or generate 3.54% return on investment over 90 days.

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

BNY Mellon International  vs.  BNY Mellon Large

BNY Mellon International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNY Mellon International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, BNY Mellon is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

BNY Mellon Large

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BNY Mellon Large are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, BNY Mellon may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with BNY Mellon and BNY Mellon

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

The idea behind BNY Mellon International and BNY Mellon Large 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.