Correlation Between Ford and Bny Mellon
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Bny Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Bny Mellon Municipal, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Bny Mellon.
Diversification Opportunities for Ford and Bny Mellon
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Bny is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Bny Mellon Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Municipal and Ford 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 Ford Motor 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 Municipal has no effect on the direction of Ford i.e., Ford and Bny Mellon go up and down completely randomly.
Pair Corralation between Ford and Bny Mellon
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Bny Mellon. In addition to that, Ford is 4.4 times more volatile than Bny Mellon Municipal. It trades about -0.02 of its total potential returns per unit of risk. Bny Mellon Municipal is currently generating about 0.04 per unit of volatility. If you would invest 997.00 in Bny Mellon Municipal on November 5, 2024 and sell it today you would earn a total of 47.00 from holding Bny Mellon Municipal or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Bny Mellon Municipal
Performance |
| Timeline |
| Ford Motor |
| Bny Mellon Municipal |
Ford and Bny Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Bny Mellon
The main advantage of trading using opposite Ford and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor and Bny Mellon Municipal 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. Tekla Healthcare Opportunities | Bny Mellon vs. Flaherty Crumrine Preferred | Bny Mellon vs. Flaherty Crumrine Total | Bny Mellon vs. Calamos Dynamic Convertible |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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