Correlation Between GM and Bny Mellon
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Bny Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Bny Mellon National, you can compare the effects of market volatilities on GM 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 GM with a short position of Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Bny Mellon.
Diversification Opportunities for GM and Bny Mellon
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Bny is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Bny Mellon National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon National and GM 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 General Motors 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 National has no effect on the direction of GM i.e., GM and Bny Mellon go up and down completely randomly.
Pair Corralation between GM and Bny Mellon
Allowing for the 90-day total investment horizon General Motors is expected to generate 12.1 times more return on investment than Bny Mellon. However, GM is 12.1 times more volatile than Bny Mellon National. It trades about 0.08 of its potential returns per unit of risk. Bny Mellon National is currently generating about 0.14 per unit of risk. If you would invest 4,551 in General Motors on September 1, 2024 and sell it today you would earn a total of 1,008 from holding General Motors or generate 22.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
General Motors vs. Bny Mellon National
Performance |
| Timeline |
| General Motors |
| Bny Mellon National |
GM and Bny Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Bny Mellon
The main advantage of trading using opposite GM and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors and Bny Mellon National 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. Bny Mellon Massachusetts | Bny Mellon vs. Bny Mellon Massachusetts | Bny Mellon vs. Bny Mellon New | Bny Mellon vs. Bny Mellon Municipal |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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