Correlation Between Gmo High and Bny Mellon
Can any of the company-specific risk be diversified away by investing in both Gmo High 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 Gmo High and Bny Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Bny Mellon Asset, you can compare the effects of market volatilities on Gmo High 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 Gmo High with a short position of Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Bny Mellon.
Diversification Opportunities for Gmo High and Bny Mellon
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gmo and Bny is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Bny Mellon Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Asset and Gmo High 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 Gmo High Yield 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 Asset has no effect on the direction of Gmo High i.e., Gmo High and Bny Mellon go up and down completely randomly.
Pair Corralation between Gmo High and Bny Mellon
Assuming the 90 days horizon Gmo High is expected to generate 1.51 times less return on investment than Bny Mellon. But when comparing it to its historical volatility, Gmo High Yield is 2.65 times less risky than Bny Mellon. It trades about 0.23 of its potential returns per unit of risk. Bny Mellon Asset is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,328 in Bny Mellon Asset on September 1, 2024 and sell it today you would earn a total of 128.00 from holding Bny Mellon Asset or generate 9.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Gmo High Yield vs. Bny Mellon Asset
Performance |
| Timeline |
| Gmo High Yield |
| Bny Mellon Asset |
Gmo High and Bny Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Bny Mellon
The main advantage of trading using opposite Gmo High and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High 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.| Gmo High vs. Legg Mason Bw | Gmo High vs. Aqr Large Cap | Gmo High vs. Enhanced Large Pany | Gmo High vs. Jhancock Disciplined Value |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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