Correlation Between Bny Mellon and Financial Industries
Can any of the company-specific risk be diversified away by investing in both Bny Mellon and Financial Industries 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 Bny Mellon and Financial Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bny Mellon Mid and Financial Industries Fund, you can compare the effects of market volatilities on Bny Mellon and Financial Industries 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 Bny Mellon with a short position of Financial Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bny Mellon and Financial Industries.
Diversification Opportunities for Bny Mellon and Financial Industries
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bny and FINANCIAL is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Bny Mellon Mid and Financial Industries Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Industries and Bny Mellon 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 Bny Mellon Mid are associated (or correlated) with Financial Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Industries has no effect on the direction of Bny Mellon i.e., Bny Mellon and Financial Industries go up and down completely randomly.
Pair Corralation between Bny Mellon and Financial Industries
Assuming the 90 days horizon Bny Mellon is expected to generate 1.39 times less return on investment than Financial Industries. But when comparing it to its historical volatility, Bny Mellon Mid is 1.94 times less risky than Financial Industries. It trades about 0.37 of its potential returns per unit of risk. Financial Industries Fund is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,918 in Financial Industries Fund on August 30, 2024 and sell it today you would earn a total of 210.00 from holding Financial Industries Fund or generate 10.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bny Mellon Mid vs. Financial Industries Fund
Performance |
| Timeline |
| Bny Mellon Mid |
| Financial Industries |
Bny Mellon and Financial Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bny Mellon and Financial Industries
The main advantage of trading using opposite Bny Mellon and Financial Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bny Mellon position performs unexpectedly, Financial Industries 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 Financial Industries will offset losses from the drop in Financial Industries' long position.| Bny Mellon vs. Financial Industries Fund | Bny Mellon vs. Angel Oak Financial | Bny Mellon vs. Prudential Jennison Financial | Bny Mellon vs. Dws Government Money |
| Financial Industries vs. HUMANA INC | Financial Industries vs. Aquagold International | Financial Industries vs. Barloworld Ltd ADR | Financial Industries vs. Morningstar Unconstrained Allocation |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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