Correlation Between Western Asset and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and BNY Mellon High, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and BNY Mellon.
Diversification Opportunities for Western Asset and BNY Mellon
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and BNY is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and BNY Mellon High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon High and Western Asset 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 Western Asset High 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 High has no effect on the direction of Western Asset i.e., Western Asset and BNY Mellon go up and down completely randomly.
Pair Corralation between Western Asset and BNY Mellon
Considering the 90-day investment horizon Western Asset is expected to generate 6.32 times less return on investment than BNY Mellon. But when comparing it to its historical volatility, Western Asset High is 1.01 times less risky than BNY Mellon. It trades about 0.04 of its potential returns per unit of risk. BNY Mellon High is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 256.00 in BNY Mellon High on August 28, 2024 and sell it today you would earn a total of 9.00 from holding BNY Mellon High or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. BNY Mellon High
Performance |
| Timeline |
| Western Asset High |
| BNY Mellon High |
Western Asset and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and BNY Mellon
The main advantage of trading using opposite Western Asset and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Western Asset Global | Western Asset vs. Western Asset High | Western Asset vs. Voya Global Advantage | Western Asset vs. Voya Global Equity |
| BNY Mellon vs. Credit Suisse Asset | BNY Mellon vs. Mfs Intermediate High | BNY Mellon vs. Eaton Vance Risk | BNY Mellon vs. Nuveen Floating Rate |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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