Correlation Between FlexShares STOXX and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both FlexShares STOXX 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 FlexShares STOXX and BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares STOXX Global and BNY Mellon ETF, you can compare the effects of market volatilities on FlexShares STOXX 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 FlexShares STOXX with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares STOXX and BNY Mellon.
Diversification Opportunities for FlexShares STOXX and BNY Mellon
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FlexShares and BNY is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares STOXX Global 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 FlexShares STOXX 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 FlexShares STOXX Global 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 FlexShares STOXX i.e., FlexShares STOXX and BNY Mellon go up and down completely randomly.
Pair Corralation between FlexShares STOXX and BNY Mellon
Given the investment horizon of 90 days FlexShares STOXX Global is expected to generate 24.52 times more return on investment than BNY Mellon. However, FlexShares STOXX is 24.52 times more volatile than BNY Mellon ETF. It trades about 0.07 of its potential returns per unit of risk. BNY Mellon ETF is currently generating about 0.74 per unit of risk. If you would invest 16,241 in FlexShares STOXX Global on September 3, 2024 and sell it today you would earn a total of 1,074 from holding FlexShares STOXX Global or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares STOXX Global vs. BNY Mellon ETF
Performance |
| Timeline |
| FlexShares STOXX Global |
| BNY Mellon ETF |
FlexShares STOXX and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares STOXX and BNY Mellon
The main advantage of trading using opposite FlexShares STOXX and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares STOXX 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.| FlexShares STOXX vs. FlexShares Quality Large | FlexShares STOXX vs. FlexShares Disciplined Duration | FlexShares STOXX vs. FlexShares Real Assets | FlexShares STOXX vs. First Trust Developed |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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