Correlation Between BNY Mellon and European Equity
Can any of the company-specific risk be diversified away by investing in both BNY Mellon and European Equity 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 European Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNY Mellon High and European Equity Closed, you can compare the effects of market volatilities on BNY Mellon and European Equity 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 European Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNY Mellon and European Equity.
Diversification Opportunities for BNY Mellon and European Equity
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between BNY and European is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon High and European Equity Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Equity Closed 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 High are associated (or correlated) with European Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Equity Closed has no effect on the direction of BNY Mellon i.e., BNY Mellon and European Equity go up and down completely randomly.
Pair Corralation between BNY Mellon and European Equity
Considering the 90-day investment horizon BNY Mellon is expected to generate 16.94 times less return on investment than European Equity. But when comparing it to its historical volatility, BNY Mellon High is 1.54 times less risky than European Equity. It trades about 0.04 of its potential returns per unit of risk. European Equity Closed is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 814.00 in European Equity Closed on November 2, 2024 and sell it today you would earn a total of 58.00 from holding European Equity Closed or generate 7.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNY Mellon High vs. European Equity Closed
Performance |
| Timeline |
| BNY Mellon High |
| European Equity Closed |
BNY Mellon and European Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNY Mellon and European Equity
The main advantage of trading using opposite BNY Mellon and European Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNY Mellon position performs unexpectedly, European Equity 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 European Equity will offset losses from the drop in European Equity's long position.| BNY Mellon vs. Credit Suisse Asset | BNY Mellon vs. Mfs Intermediate High | BNY Mellon vs. Eaton Vance Risk | BNY Mellon vs. Nuveen Floating Rate |
| European Equity vs. XAI Octagon Floating | European Equity vs. MFS Charter Income | European Equity vs. Nuveen New York | European Equity vs. Western Asset High |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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