Correlation Between American Beacon and Bny Mellon
Can any of the company-specific risk be diversified away by investing in both American Beacon 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 American Beacon and Bny Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Stephens and Bny Mellon Mid, you can compare the effects of market volatilities on American Beacon 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 American Beacon with a short position of Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Bny Mellon.
Diversification Opportunities for American Beacon and Bny Mellon
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between American and Bny is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Stephens and Bny Mellon Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Mid and American Beacon 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 American Beacon Stephens 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 Mid has no effect on the direction of American Beacon i.e., American Beacon and Bny Mellon go up and down completely randomly.
Pair Corralation between American Beacon and Bny Mellon
Assuming the 90 days horizon American Beacon Stephens is expected to generate 1.06 times more return on investment than Bny Mellon. However, American Beacon is 1.06 times more volatile than Bny Mellon Mid. It trades about 0.5 of its potential returns per unit of risk. Bny Mellon Mid is currently generating about 0.46 per unit of risk. If you would invest 3,780 in American Beacon Stephens on September 3, 2024 and sell it today you would earn a total of 389.00 from holding American Beacon Stephens or generate 10.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Stephens vs. Bny Mellon Mid
Performance |
| Timeline |
| American Beacon Stephens |
| Bny Mellon Mid |
American Beacon and Bny Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Bny Mellon
The main advantage of trading using opposite American Beacon and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon 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.| American Beacon vs. Bny Mellon Mid | American Beacon vs. Columbia Mid Cap | American Beacon vs. Invesco Small Cap | American Beacon vs. Emerging Markets Small |
| Bny Mellon vs. Bny Mellon Small | Bny Mellon vs. Bny Mellon International | Bny Mellon vs. Bny Mellon Emerging | Bny Mellon vs. Invesco Disciplined Equity |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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