Correlation Between BNY Mellon and Western Asset
Can any of the company-specific risk be diversified away by investing in both BNY Mellon and Western Asset 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 Western Asset 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 Western Asset High, you can compare the effects of market volatilities on BNY Mellon and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNY Mellon and Western Asset.
Diversification Opportunities for BNY Mellon and Western Asset
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BNY and Western is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon High and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset High has no effect on the direction of BNY Mellon i.e., BNY Mellon and Western Asset go up and down completely randomly.
Pair Corralation between BNY Mellon and Western Asset
Considering the 90-day investment horizon BNY Mellon High is expected to generate 1.16 times more return on investment than Western Asset. However, BNY Mellon is 1.16 times more volatile than Western Asset High. It trades about 0.14 of its potential returns per unit of risk. Western Asset High is currently generating about 0.08 per unit of risk. If you would invest 258.00 in BNY Mellon High on August 24, 2024 and sell it today you would earn a total of 6.00 from holding BNY Mellon High or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
BNY Mellon High vs. Western Asset High
Performance |
| Timeline |
| BNY Mellon High |
| Western Asset High |
BNY Mellon and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNY Mellon and Western Asset
The main advantage of trading using opposite BNY Mellon and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNY Mellon position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| BNY Mellon vs. MFS Investment Grade | BNY Mellon vs. Invesco High Income | BNY Mellon vs. Eaton Vance National | BNY Mellon vs. Nuveen California Select |
| Western Asset vs. Western Asset High | Western Asset vs. Western Asset High | Western Asset vs. Blackrock Debt Strategies | Western Asset vs. Western Asset Diversified |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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