Correlation Between Dimensional International and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both Dimensional International 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 International 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 International High and BNY Mellon ETF, you can compare the effects of market volatilities on Dimensional International 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 International with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and BNY Mellon.
Diversification Opportunities for Dimensional International and BNY Mellon
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dimensional and BNY is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International High and BNY Mellon ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon ETF and Dimensional International 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 International High 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 ETF has no effect on the direction of Dimensional International i.e., Dimensional International and BNY Mellon go up and down completely randomly.
Pair Corralation between Dimensional International and BNY Mellon
Given the investment horizon of 90 days Dimensional International High is expected to generate 20.13 times more return on investment than BNY Mellon. However, Dimensional International is 20.13 times more volatile than BNY Mellon ETF. It trades about 0.05 of its potential returns per unit of risk. BNY Mellon ETF is currently generating about 0.5 per unit of risk. If you would invest 2,202 in Dimensional International High on September 3, 2024 and sell it today you would earn a total of 420.00 from holding Dimensional International High or generate 19.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional International High vs. BNY Mellon ETF
Performance |
| Timeline |
| Dimensional International |
| BNY Mellon ETF |
Dimensional International and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional International and BNY Mellon
The main advantage of trading using opposite Dimensional International and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional International 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.The idea behind Dimensional International High and BNY Mellon ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| BNY Mellon vs. SPDR SSgA Ultra | BNY Mellon vs. SPDR Bloomberg Barclays | BNY Mellon vs. American Century ETF |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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