Correlation Between BlackRock AAA and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both BlackRock AAA 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 BlackRock AAA and BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock AAA CLO and BNY Mellon High, you can compare the effects of market volatilities on BlackRock AAA 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 BlackRock AAA with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock AAA and BNY Mellon.
Diversification Opportunities for BlackRock AAA and BNY Mellon
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BlackRock and BNY is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock AAA CLO and BNY Mellon High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon High and BlackRock AAA 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 BlackRock AAA CLO 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 High has no effect on the direction of BlackRock AAA i.e., BlackRock AAA and BNY Mellon go up and down completely randomly.
Pair Corralation between BlackRock AAA and BNY Mellon
Given the investment horizon of 90 days BlackRock AAA is expected to generate 2.1 times less return on investment than BNY Mellon. But when comparing it to its historical volatility, BlackRock AAA CLO is 11.3 times less risky than BNY Mellon. It trades about 0.4 of its potential returns per unit of risk. BNY Mellon High is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 196.00 in BNY Mellon High on August 27, 2024 and sell it today you would earn a total of 69.00 from holding BNY Mellon High or generate 35.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.96% |
| Values | Daily Returns |
BlackRock AAA CLO vs. BNY Mellon High
Performance |
| Timeline |
| BlackRock AAA CLO |
| BNY Mellon High |
BlackRock AAA and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock AAA and BNY Mellon
The main advantage of trading using opposite BlackRock AAA and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock AAA 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.| BlackRock AAA vs. Janus Detroit Street | BlackRock AAA vs. Janus Detroit Street | BlackRock AAA vs. VanEck ETF Trust | BlackRock AAA vs. Panagram Bbb B Clo |
| BNY Mellon vs. Credit Suisse Asset | BNY Mellon vs. Mfs Intermediate High | BNY Mellon vs. Eaton Vance Risk | BNY Mellon vs. Nuveen Floating Rate |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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