Correlation Between BNY Mellon and FF Global
Can any of the company-specific risk be diversified away by investing in both BNY Mellon and FF Global 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 FF Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNY Mellon Global and FF Global, you can compare the effects of market volatilities on BNY Mellon and FF Global 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 FF Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNY Mellon and FF Global.
Diversification Opportunities for BNY Mellon and FF Global
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BNY and FJ2P is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon Global and FF Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FF Global 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 Global are associated (or correlated) with FF Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FF Global has no effect on the direction of BNY Mellon i.e., BNY Mellon and FF Global go up and down completely randomly.
Pair Corralation between BNY Mellon and FF Global
Assuming the 90 days trading horizon BNY Mellon is expected to generate 3.63 times less return on investment than FF Global. But when comparing it to its historical volatility, BNY Mellon Global is 2.26 times less risky than FF Global. It trades about 0.15 of its potential returns per unit of risk. FF Global is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 7,198 in FF Global on September 14, 2024 and sell it today you would earn a total of 320.00 from holding FF Global or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNY Mellon Global vs. FF Global
Performance |
| Timeline |
| BNY Mellon Global |
| FF Global |
BNY Mellon and FF Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNY Mellon and FF Global
The main advantage of trading using opposite BNY Mellon and FF Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNY Mellon position performs unexpectedly, FF Global 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 FF Global will offset losses from the drop in FF Global's long position.| BNY Mellon vs. Lord Abbett Short | BNY Mellon vs. R co Valor F | BNY Mellon vs. Barings Global Umbrella | BNY Mellon vs. iShares Equity Enhanced |
| FF Global vs. Azvalor Global Value | FF Global vs. JPM Global Natural | FF Global vs. Cobas Global PP | FF Global vs. Aberdeen Global Asian |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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