Correlation Between SPDR SP and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Global and BNY Mellon ETF, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and BNY Mellon.
Diversification Opportunities for SPDR SP and BNY Mellon
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and BNY is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 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 SPDR SP 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 SPDR SP 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 SPDR SP i.e., SPDR SP and BNY Mellon go up and down completely randomly.
Pair Corralation between SPDR SP and BNY Mellon
Considering the 90-day investment horizon SPDR SP Global is expected to generate 0.91 times more return on investment than BNY Mellon. However, SPDR SP Global is 1.1 times less risky than BNY Mellon. It trades about 0.15 of its potential returns per unit of risk. BNY Mellon ETF is currently generating about 0.08 per unit of risk. If you would invest 5,590 in SPDR SP Global on September 1, 2024 and sell it today you would earn a total of 738.00 from holding SPDR SP Global or generate 13.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
SPDR SP Global vs. BNY Mellon ETF
Performance |
| Timeline |
| SPDR SP Global |
| BNY Mellon ETF |
SPDR SP and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and BNY Mellon
The main advantage of trading using opposite SPDR SP and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.| SPDR SP vs. VanEck Vectors ETF | SPDR SP vs. Global X Wind | SPDR SP vs. Invesco Electric Vehicle | SPDR SP vs. Global X Disruptive |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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