Correlation Between First American and Bny Mellon
Can any of the company-specific risk be diversified away by investing in both First American 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 First American and Bny Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First American Funds and Bny Mellon New, you can compare the effects of market volatilities on First American 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 First American with a short position of Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of First American and Bny Mellon.
Diversification Opportunities for First American and Bny Mellon
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Bny is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding First American Funds and Bny Mellon New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon New and First American 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 First American Funds 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 New has no effect on the direction of First American i.e., First American and Bny Mellon go up and down completely randomly.
Pair Corralation between First American and Bny Mellon
Assuming the 90 days horizon First American Funds is expected to generate 0.6 times more return on investment than Bny Mellon. However, First American Funds is 1.66 times less risky than Bny Mellon. It trades about 0.13 of its potential returns per unit of risk. Bny Mellon New is currently generating about 0.02 per unit of risk. If you would invest 99.00 in First American Funds on September 12, 2024 and sell it today you would earn a total of 1.00 from holding First American Funds or generate 1.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
First American Funds vs. Bny Mellon New
Performance |
Timeline |
First American Funds |
Bny Mellon New |
First American and Bny Mellon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First American and Bny Mellon
The main advantage of trading using opposite First American and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First American 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.First American vs. Siit Ultra Short | First American vs. Quantitative Longshort Equity | First American vs. Rbc Short Duration | First American vs. Franklin Federal Limited Term |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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