Correlation Between SoFi Select and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both SoFi Select 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 SoFi Select and BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoFi Select 500 and BNY Mellon Large, you can compare the effects of market volatilities on SoFi Select 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 SoFi Select with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoFi Select and BNY Mellon.
Diversification Opportunities for SoFi Select and BNY Mellon
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SoFi and BNY is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Select 500 and BNY Mellon Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon Large and SoFi Select 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 SoFi Select 500 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 Large has no effect on the direction of SoFi Select i.e., SoFi Select and BNY Mellon go up and down completely randomly.
Pair Corralation between SoFi Select and BNY Mellon
Considering the 90-day investment horizon SoFi Select 500 is expected to generate 1.3 times more return on investment than BNY Mellon. However, SoFi Select is 1.3 times more volatile than BNY Mellon Large. It trades about 0.12 of its potential returns per unit of risk. BNY Mellon Large is currently generating about 0.14 per unit of risk. If you would invest 9,513 in SoFi Select 500 on September 1, 2024 and sell it today you would earn a total of 1,653 from holding SoFi Select 500 or generate 17.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SoFi Select 500 vs. BNY Mellon Large
Performance |
| Timeline |
| SoFi Select 500 |
| BNY Mellon Large |
SoFi Select and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoFi Select and BNY Mellon
The main advantage of trading using opposite SoFi Select and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoFi Select 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.| SoFi Select vs. Vanguard Growth Index | SoFi Select vs. iShares Russell 1000 | SoFi Select vs. iShares SP 500 | SoFi Select vs. iShares Core SP |
| BNY Mellon vs. Vanguard Total Stock | BNY Mellon vs. SPDR SP 500 | BNY Mellon vs. iShares Core SP | BNY Mellon vs. Vanguard Dividend Appreciation |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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