Correlation Between SPDR Portfolio and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio 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 SPDR Portfolio and BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio Aggregate and BNY Mellon Core, you can compare the effects of market volatilities on SPDR Portfolio 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 SPDR Portfolio with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and BNY Mellon.
Diversification Opportunities for SPDR Portfolio and BNY Mellon
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and BNY is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Aggregate and BNY Mellon Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon Core and SPDR Portfolio 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 SPDR Portfolio Aggregate 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 Core has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and BNY Mellon go up and down completely randomly.
Pair Corralation between SPDR Portfolio and BNY Mellon
Given the investment horizon of 90 days SPDR Portfolio Aggregate is expected to generate 1.08 times more return on investment than BNY Mellon. However, SPDR Portfolio is 1.08 times more volatile than BNY Mellon Core. It trades about 0.05 of its potential returns per unit of risk. BNY Mellon Core is currently generating about 0.06 per unit of risk. If you would invest 2,533 in SPDR Portfolio Aggregate on August 29, 2024 and sell it today you would earn a total of 11.00 from holding SPDR Portfolio Aggregate or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio Aggregate vs. BNY Mellon Core
Performance |
| Timeline |
| SPDR Portfolio Aggregate |
| BNY Mellon Core |
SPDR Portfolio and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and BNY Mellon
The main advantage of trading using opposite SPDR Portfolio and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio 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.| SPDR Portfolio vs. iShares Agency Bond | SPDR Portfolio vs. iShares GNMA Bond | SPDR Portfolio vs. iShares JP Morgan | SPDR Portfolio vs. iShares Aaa |
| BNY Mellon vs. BNY Mellon Large | BNY Mellon vs. BNY Mellon International | BNY Mellon vs. BNY Mellon High | BNY Mellon vs. BNY Mellon ETF |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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