Correlation Between BNY Mellon and FlexShares STOXX
Can any of the company-specific risk be diversified away by investing in both BNY Mellon and FlexShares STOXX 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 FlexShares STOXX 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 FlexShares STOXX Global, you can compare the effects of market volatilities on BNY Mellon and FlexShares STOXX 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 FlexShares STOXX. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNY Mellon and FlexShares STOXX.
Diversification Opportunities for BNY Mellon and FlexShares STOXX
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BNY and FlexShares is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon ETF and FlexShares STOXX Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares STOXX Global 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 FlexShares STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares STOXX Global has no effect on the direction of BNY Mellon i.e., BNY Mellon and FlexShares STOXX go up and down completely randomly.
Pair Corralation between BNY Mellon and FlexShares STOXX
Given the investment horizon of 90 days BNY Mellon is expected to generate 3.43 times less return on investment than FlexShares STOXX. But when comparing it to its historical volatility, BNY Mellon ETF is 19.44 times less risky than FlexShares STOXX. It trades about 0.55 of its potential returns per unit of risk. FlexShares STOXX Global is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 12,365 in FlexShares STOXX Global on September 3, 2024 and sell it today you would earn a total of 4,950 from holding FlexShares STOXX Global or generate 40.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNY Mellon ETF vs. FlexShares STOXX Global
Performance |
| Timeline |
| BNY Mellon ETF |
| FlexShares STOXX Global |
BNY Mellon and FlexShares STOXX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNY Mellon and FlexShares STOXX
The main advantage of trading using opposite BNY Mellon and FlexShares STOXX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNY Mellon position performs unexpectedly, FlexShares STOXX 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 FlexShares STOXX will offset losses from the drop in FlexShares STOXX's long position.| BNY Mellon vs. SPDR SSgA Ultra | BNY Mellon vs. SPDR Bloomberg Barclays | BNY Mellon vs. American Century ETF |
| FlexShares STOXX vs. FlexShares Quality Large | FlexShares STOXX vs. FlexShares Disciplined Duration | FlexShares STOXX vs. FlexShares Real Assets | FlexShares STOXX vs. First Trust Developed |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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