Correlation Between Old Westbury and Bny Mellon
Can any of the company-specific risk be diversified away by investing in both Old Westbury 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 Old Westbury and Bny Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Short Term and Bny Mellon National, you can compare the effects of market volatilities on Old Westbury 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 Old Westbury with a short position of Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Bny Mellon.
Diversification Opportunities for Old Westbury and Bny Mellon
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Bny is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Short Term and Bny Mellon National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon National and Old Westbury 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 Old Westbury Short Term 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 National has no effect on the direction of Old Westbury i.e., Old Westbury and Bny Mellon go up and down completely randomly.
Pair Corralation between Old Westbury and Bny Mellon
Assuming the 90 days horizon Old Westbury Short Term is expected to generate 1.76 times more return on investment than Bny Mellon. However, Old Westbury is 1.76 times more volatile than Bny Mellon National. It trades about 0.15 of its potential returns per unit of risk. Bny Mellon National is currently generating about 0.15 per unit of risk. If you would invest 1,014 in Old Westbury Short Term on September 1, 2024 and sell it today you would earn a total of 4.00 from holding Old Westbury Short Term or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Old Westbury Short Term vs. Bny Mellon National
Performance |
| Timeline |
| Old Westbury Short |
| Bny Mellon National |
Old Westbury and Bny Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Bny Mellon
The main advantage of trading using opposite Old Westbury and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury 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 Old Westbury Short Term and Bny Mellon National 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. Federated Ultrashort Bond | Bny Mellon vs. Goldman Sachs Short Term | Bny Mellon vs. Aqr Long Short Equity | Bny Mellon vs. Old Westbury Short Term |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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