Correlation Between IShares Infrastructure and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both IShares Infrastructure 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 IShares Infrastructure and BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Infrastructure ETF and BNY Mellon ETF, you can compare the effects of market volatilities on IShares Infrastructure 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 IShares Infrastructure with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Infrastructure and BNY Mellon.
Diversification Opportunities for IShares Infrastructure and BNY Mellon
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and BNY is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding iShares Infrastructure ETF 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 IShares Infrastructure 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 iShares Infrastructure ETF 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 IShares Infrastructure i.e., IShares Infrastructure and BNY Mellon go up and down completely randomly.
Pair Corralation between IShares Infrastructure and BNY Mellon
Given the investment horizon of 90 days iShares Infrastructure ETF is expected to generate 1.27 times more return on investment than BNY Mellon. However, IShares Infrastructure is 1.27 times more volatile than BNY Mellon ETF. It trades about 0.09 of its potential returns per unit of risk. BNY Mellon ETF is currently generating about 0.07 per unit of risk. If you would invest 3,972 in iShares Infrastructure ETF on September 14, 2024 and sell it today you would earn a total of 936.00 from holding iShares Infrastructure ETF or generate 23.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
iShares Infrastructure ETF vs. BNY Mellon ETF
Performance |
| Timeline |
| iShares Infrastructure |
| BNY Mellon ETF |
IShares Infrastructure and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Infrastructure and BNY Mellon
The main advantage of trading using opposite IShares Infrastructure and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Infrastructure 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 iShares Infrastructure ETF and BNY Mellon ETF 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.
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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