Correlation Between BNY Mellon and IShares Trust
Can any of the company-specific risk be diversified away by investing in both BNY Mellon and IShares Trust 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 IShares Trust 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 iShares Trust , you can compare the effects of market volatilities on BNY Mellon and IShares Trust 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNY Mellon and IShares Trust.
Diversification Opportunities for BNY Mellon and IShares Trust
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between BNY and IShares is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon ETF and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of BNY Mellon i.e., BNY Mellon and IShares Trust go up and down completely randomly.
Pair Corralation between BNY Mellon and IShares Trust
Given the investment horizon of 90 days BNY Mellon is expected to generate 2.78 times less return on investment than IShares Trust. But when comparing it to its historical volatility, BNY Mellon ETF is 11.22 times less risky than IShares Trust. It trades about 0.98 of its potential returns per unit of risk. iShares Trust is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,266 in iShares Trust on December 1, 2024 and sell it today you would earn a total of 62.00 from holding iShares Trust or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNY Mellon ETF vs. iShares Trust
Performance |
| Timeline |
| BNY Mellon ETF |
| iShares Trust |
BNY Mellon and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNY Mellon and IShares Trust
The main advantage of trading using opposite BNY Mellon and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNY Mellon position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.| BNY Mellon vs. SPDR SSgA Ultra | BNY Mellon vs. SPDR Bloomberg Barclays | BNY Mellon vs. American Century ETF |
| IShares Trust vs. iShares ESG Aggregate | IShares Trust vs. iShares ESG Advanced | IShares Trust vs. iShares ESG Advanced | IShares Trust vs. iShares ESG USD |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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