Correlation Between HP and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both HP 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 HP and BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and BNY Mellon Mid, you can compare the effects of market volatilities on HP 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 HP with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and BNY Mellon.
Diversification Opportunities for HP and BNY Mellon
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HP and BNY is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and BNY Mellon Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon Mid and HP 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 HP Inc 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 Mid has no effect on the direction of HP i.e., HP and BNY Mellon go up and down completely randomly.
Pair Corralation between HP and BNY Mellon
Considering the 90-day investment horizon HP is expected to generate 11.51 times less return on investment than BNY Mellon. In addition to that, HP is 2.88 times more volatile than BNY Mellon Mid. It trades about 0.01 of its total potential returns per unit of risk. BNY Mellon Mid is currently generating about 0.37 per unit of volatility. If you would invest 10,128 in BNY Mellon Mid on September 1, 2024 and sell it today you would earn a total of 851.00 from holding BNY Mellon Mid or generate 8.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. BNY Mellon Mid
Performance |
| Timeline |
| HP Inc |
| BNY Mellon Mid |
HP and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and BNY Mellon
The main advantage of trading using opposite HP and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP 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 HP Inc and BNY Mellon Mid 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. iShares Small Cap | BNY Mellon vs. Invesco ESG NASDAQ | BNY Mellon vs. Invesco ESG NASDAQ | BNY Mellon vs. BlackRock Carbon Transition |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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