Correlation Between Dimensional Core and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both Dimensional Core 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 Dimensional Core and BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional Core Equity and BNY Mellon Large, you can compare the effects of market volatilities on Dimensional Core 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 Dimensional Core with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Core and BNY Mellon.
Diversification Opportunities for Dimensional Core and BNY Mellon
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Dimensional and BNY is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Core Equity 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 Dimensional Core 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 Dimensional Core Equity 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 Dimensional Core i.e., Dimensional Core and BNY Mellon go up and down completely randomly.
Pair Corralation between Dimensional Core and BNY Mellon
Given the investment horizon of 90 days Dimensional Core is expected to generate 1.02 times less return on investment than BNY Mellon. In addition to that, Dimensional Core is 1.04 times more volatile than BNY Mellon Large. It trades about 0.13 of its total potential returns per unit of risk. BNY Mellon Large is currently generating about 0.14 per unit of volatility. If you would invest 9,949 in BNY Mellon Large on September 1, 2024 and sell it today you would earn a total of 1,577 from holding BNY Mellon Large or generate 15.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dimensional Core Equity vs. BNY Mellon Large
Performance |
| Timeline |
| Dimensional Core Equity |
| BNY Mellon Large |
Dimensional Core and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Core and BNY Mellon
The main advantage of trading using opposite Dimensional Core and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Core 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.| Dimensional Core vs. Dimensional Targeted Value | Dimensional Core vs. Dimensional World ex | Dimensional Core vs. Dimensional Small Cap | Dimensional Core vs. Dimensional Core Equity |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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