Correlation Between NYSE Composite and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and BNY Mellon International, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and BNY Mellon.
Diversification Opportunities for NYSE Composite and BNY Mellon
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and BNY is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and BNY Mellon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon International and NYSE Composite 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 NYSE Composite 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 International has no effect on the direction of NYSE Composite i.e., NYSE Composite and BNY Mellon go up and down completely randomly.
Pair Corralation between NYSE Composite and BNY Mellon
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.88 times more return on investment than BNY Mellon. However, NYSE Composite is 1.13 times less risky than BNY Mellon. It trades about 0.08 of its potential returns per unit of risk. BNY Mellon International is currently generating about 0.06 per unit of risk. If you would invest 1,547,479 in NYSE Composite on August 26, 2024 and sell it today you would earn a total of 464,866 from holding NYSE Composite or generate 30.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. BNY Mellon International
Performance |
| Timeline |
NYSE Composite and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
BNY Mellon International
Pair trading matchups for BNY Mellon
Pair Trading with NYSE Composite and BNY Mellon
The main advantage of trading using opposite NYSE Composite and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| BNY Mellon vs. Dimensional Core Equity | BNY Mellon vs. Dimensional Emerging Core | BNY Mellon vs. Dimensional Targeted Value | BNY Mellon vs. Dimensional Small Cap |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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