Correlation Between ETRACS Monthly and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both ETRACS Monthly and BNY Mellon 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 ETRACS Monthly and BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS Monthly Pay and BNY Mellon Large, you can compare the effects of market volatilities on ETRACS Monthly and BNY Mellon 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 ETRACS Monthly with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS Monthly and BNY Mellon.
Diversification Opportunities for ETRACS Monthly and BNY Mellon
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ETRACS and BNY is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Monthly Pay and BNY Mellon Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon Large and ETRACS Monthly 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 ETRACS Monthly Pay are associated (or correlated) with BNY Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNY Mellon Large has no effect on the direction of ETRACS Monthly i.e., ETRACS Monthly and BNY Mellon go up and down completely randomly.
Pair Corralation between ETRACS Monthly and BNY Mellon
Given the investment horizon of 90 days ETRACS Monthly is expected to generate 1.47 times less return on investment than BNY Mellon. In addition to that, ETRACS Monthly is 1.43 times more volatile than BNY Mellon Large. It trades about 0.18 of its total potential returns per unit of risk. BNY Mellon Large is currently generating about 0.38 per unit of volatility. If you would invest 10,830 in BNY Mellon Large on September 1, 2024 and sell it today you would earn a total of 696.00 from holding BNY Mellon Large or generate 6.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
ETRACS Monthly Pay vs. BNY Mellon Large
Performance |
| Timeline |
| ETRACS Monthly Pay |
| BNY Mellon Large |
ETRACS Monthly and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS Monthly and BNY Mellon
The main advantage of trading using opposite ETRACS Monthly and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS Monthly position performs unexpectedly, BNY Mellon 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 BNY Mellon will offset losses from the drop in BNY Mellon's long position.| ETRACS Monthly vs. ProShares VIX Mid Term | ETRACS Monthly vs. iPath Series B | ETRACS Monthly vs. ProShares Short Russell2000 |
| BNY Mellon vs. Vanguard Total Stock | BNY Mellon vs. SPDR SP 500 | BNY Mellon vs. iShares Core SP | BNY Mellon vs. Vanguard Dividend Appreciation |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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