Correlation Between DTF Tax and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both DTF Tax 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 DTF Tax and BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DTF Tax Free and BNY Mellon Strategic, you can compare the effects of market volatilities on DTF Tax 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 DTF Tax with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTF Tax and BNY Mellon.
Diversification Opportunities for DTF Tax and BNY Mellon
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between DTF and BNY is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding DTF Tax Free and BNY Mellon Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon Strategic and DTF Tax 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 DTF Tax Free 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 Strategic has no effect on the direction of DTF Tax i.e., DTF Tax and BNY Mellon go up and down completely randomly.
Pair Corralation between DTF Tax and BNY Mellon
Considering the 90-day investment horizon DTF Tax is expected to generate 3.61 times less return on investment than BNY Mellon. But when comparing it to its historical volatility, DTF Tax Free is 2.49 times less risky than BNY Mellon. It trades about 0.14 of its potential returns per unit of risk. BNY Mellon Strategic is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 625.00 in BNY Mellon Strategic on September 13, 2024 and sell it today you would earn a total of 14.00 from holding BNY Mellon Strategic or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DTF Tax Free vs. BNY Mellon Strategic
Performance |
| Timeline |
| DTF Tax Free |
| BNY Mellon Strategic |
DTF Tax and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTF Tax and BNY Mellon
The main advantage of trading using opposite DTF Tax and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTF Tax 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.| DTF Tax vs. MFS Investment Grade | DTF Tax vs. Eaton Vance National | DTF Tax vs. MFS High Yield | DTF Tax vs. MFS Municipal Income |
| BNY Mellon vs. Blackrock Muniholdings Closed | BNY Mellon vs. DTF Tax Free | BNY Mellon vs. John Hancock Income | BNY Mellon vs. MFS Investment Grade |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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