Correlation Between BNY Mellon and Dimensional Core
Can any of the company-specific risk be diversified away by investing in both BNY Mellon and Dimensional Core 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 Dimensional Core 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 Dimensional Core Equity, you can compare the effects of market volatilities on BNY Mellon and Dimensional Core 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 Dimensional Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNY Mellon and Dimensional Core.
Diversification Opportunities for BNY Mellon and Dimensional Core
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BNY and Dimensional is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon International and Dimensional Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Core Equity 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 Dimensional Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Core Equity has no effect on the direction of BNY Mellon i.e., BNY Mellon and Dimensional Core go up and down completely randomly.
Pair Corralation between BNY Mellon and Dimensional Core
Given the investment horizon of 90 days BNY Mellon is expected to generate 1.87 times less return on investment than Dimensional Core. But when comparing it to its historical volatility, BNY Mellon International is 1.01 times less risky than Dimensional Core. It trades about 0.06 of its potential returns per unit of risk. Dimensional Core Equity is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,751 in Dimensional Core Equity on August 26, 2024 and sell it today you would earn a total of 1,408 from holding Dimensional Core Equity or generate 51.18% 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. Dimensional Core Equity
Performance |
| Timeline |
| BNY Mellon International |
| Dimensional Core Equity |
BNY Mellon and Dimensional Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNY Mellon and Dimensional Core
The main advantage of trading using opposite BNY Mellon and Dimensional Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNY Mellon position performs unexpectedly, Dimensional Core 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 Dimensional Core will offset losses from the drop in Dimensional Core's long position.| BNY Mellon vs. Dimensional Core Equity | BNY Mellon vs. Dimensional Emerging Core | BNY Mellon vs. Dimensional Targeted Value | BNY Mellon vs. Dimensional Small Cap |
| Dimensional Core vs. Dimensional International Core | Dimensional Core vs. Dimensional Emerging Core | Dimensional Core vs. Dimensional Core Equity | Dimensional Core vs. Dimensional Small Cap |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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