Correlation Between BNY Mellon and American Century
Can any of the company-specific risk be diversified away by investing in both BNY Mellon and American Century 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 American Century 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 American Century Sustainable, you can compare the effects of market volatilities on BNY Mellon and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNY Mellon and American Century.
Diversification Opportunities for BNY Mellon and American Century
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BNY and American is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon ETF and American Century Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Sus 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 American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Sus has no effect on the direction of BNY Mellon i.e., BNY Mellon and American Century go up and down completely randomly.
Pair Corralation between BNY Mellon and American Century
Given the investment horizon of 90 days BNY Mellon is expected to generate 16.22 times less return on investment than American Century. But when comparing it to its historical volatility, BNY Mellon ETF is 37.72 times less risky than American Century. It trades about 0.64 of its potential returns per unit of risk. American Century Sustainable is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 5,486 in American Century Sustainable on September 3, 2024 and sell it today you would earn a total of 289.00 from holding American Century Sustainable or generate 5.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNY Mellon ETF vs. American Century Sustainable
Performance |
| Timeline |
| BNY Mellon ETF |
| American Century Sus |
BNY Mellon and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNY Mellon and American Century
The main advantage of trading using opposite BNY Mellon and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNY Mellon position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| BNY Mellon vs. SPDR SSgA Ultra | BNY Mellon vs. SPDR Bloomberg Barclays | BNY Mellon vs. American Century ETF |
| American Century vs. American Century Sustainable | American Century vs. IndexIQ Active ETF | American Century vs. FlexShares STOXX Global | American Century vs. Putnam Focused Large |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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