Correlation Between BNY Mellon and Global X
Can any of the company-specific risk be diversified away by investing in both BNY Mellon and Global X 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 Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNY Mellon ETF and Global X Infrastructure, you can compare the effects of market volatilities on BNY Mellon and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNY Mellon and Global X.
Diversification Opportunities for BNY Mellon and Global X
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BNY and Global is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon ETF and Global X Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Infrastructure 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 ETF are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Infrastructure has no effect on the direction of BNY Mellon i.e., BNY Mellon and Global X go up and down completely randomly.
Pair Corralation between BNY Mellon and Global X
Given the investment horizon of 90 days BNY Mellon is expected to generate 8.02 times less return on investment than Global X. But when comparing it to its historical volatility, BNY Mellon ETF is 2.03 times less risky than Global X. It trades about 0.07 of its potential returns per unit of risk. Global X Infrastructure is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 4,125 in Global X Infrastructure on September 4, 2024 and sell it today you would earn a total of 433.00 from holding Global X Infrastructure or generate 10.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNY Mellon ETF vs. Global X Infrastructure
Performance |
| Timeline |
| BNY Mellon ETF |
| Global X Infrastructure |
BNY Mellon and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNY Mellon and Global X
The main advantage of trading using opposite BNY Mellon and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNY Mellon position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| BNY Mellon vs. Global X Infrastructure | BNY Mellon vs. FlexShares STOXX Global | BNY Mellon vs. Invesco Dynamic Leisure | BNY Mellon vs. SPDR SP Global |
| Global X vs. iShares Infrastructure ETF | Global X vs. Global X Cloud | Global X vs. Global X Cybersecurity | Global X vs. Invesco Dynamic Leisure |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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