Correlation Between Bank of America and Bny Mellon
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and Bny Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Bny Mellon Income, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Bny Mellon.
Diversification Opportunities for Bank of America and Bny Mellon
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Bny is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Bny Mellon Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Income and Bank of America 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 America 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 Income has no effect on the direction of Bank of America i.e., Bank of America and Bny Mellon go up and down completely randomly.
Pair Corralation between Bank of America and Bny Mellon
Considering the 90-day investment horizon Bank of America is expected to generate 2.21 times more return on investment than Bny Mellon. However, Bank of America is 2.21 times more volatile than Bny Mellon Income. It trades about 0.1 of its potential returns per unit of risk. Bny Mellon Income is currently generating about 0.16 per unit of risk. If you would invest 3,938 in Bank of America on September 1, 2024 and sell it today you would earn a total of 813.00 from holding Bank of America or generate 20.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Bank of America vs. Bny Mellon Income
Performance |
| Timeline |
| Bank of America |
| Bny Mellon Income |
Bank of America and Bny Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Bny Mellon
The main advantage of trading using opposite Bank of America and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Bny Mellon vs. Bny Mellon Massachusetts | Bny Mellon vs. Bny Mellon Massachusetts | Bny Mellon vs. Bny Mellon New | Bny Mellon vs. Bny Mellon New |
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.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |