Correlation Between BNY Mellon and SoFi Select
Can any of the company-specific risk be diversified away by investing in both BNY Mellon and SoFi Select 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 SoFi Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNY Mellon Large and SoFi Select 500, you can compare the effects of market volatilities on BNY Mellon and SoFi Select 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 SoFi Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNY Mellon and SoFi Select.
Diversification Opportunities for BNY Mellon and SoFi Select
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BNY and SoFi is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon Large and SoFi Select 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoFi Select 500 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 Large are associated (or correlated) with SoFi Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoFi Select 500 has no effect on the direction of BNY Mellon i.e., BNY Mellon and SoFi Select go up and down completely randomly.
Pair Corralation between BNY Mellon and SoFi Select
Given the investment horizon of 90 days BNY Mellon Large is expected to generate 0.64 times more return on investment than SoFi Select. However, BNY Mellon Large is 1.56 times less risky than SoFi Select. It trades about 0.21 of its potential returns per unit of risk. SoFi Select 500 is currently generating about 0.09 per unit of risk. If you would invest 11,186 in BNY Mellon Large on November 3, 2024 and sell it today you would earn a total of 404.00 from holding BNY Mellon Large or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNY Mellon Large vs. SoFi Select 500
Performance |
| Timeline |
| BNY Mellon Large |
| SoFi Select 500 |
BNY Mellon and SoFi Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNY Mellon and SoFi Select
The main advantage of trading using opposite BNY Mellon and SoFi Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNY Mellon position performs unexpectedly, SoFi Select 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 SoFi Select will offset losses from the drop in SoFi Select's long position.| BNY Mellon vs. BNY Mellon Core | BNY Mellon vs. BNY Mellon International | BNY Mellon vs. BNY Mellon Mid | BNY Mellon vs. JPMorgan BetaBuilders Equity |
| SoFi Select vs. Berry Petroleum Corp | SoFi Select vs. Comstock Resources | SoFi Select vs. SoFi Next 500 | SoFi Select vs. SM Energy Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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