Correlation Between SPDR SP and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SP 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 SP 500 and BNY Mellon High, you can compare the effects of market volatilities on SPDR SP 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 SP with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and BNY Mellon.
Diversification Opportunities for SPDR SP and BNY Mellon
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and BNY is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and BNY Mellon High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon High and SPDR SP 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 SP 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 High has no effect on the direction of SPDR SP i.e., SPDR SP and BNY Mellon go up and down completely randomly.
Pair Corralation between SPDR SP and BNY Mellon
Considering the 90-day investment horizon SPDR SP is expected to generate 1.37 times less return on investment than BNY Mellon. In addition to that, SPDR SP is 1.15 times more volatile than BNY Mellon High. It trades about 0.14 of its total potential returns per unit of risk. BNY Mellon High is currently generating about 0.22 per unit of volatility. If you would invest 256.00 in BNY Mellon High on August 27, 2024 and sell it today you would earn a total of 9.00 from holding BNY Mellon High or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. BNY Mellon High
Performance |
| Timeline |
| SPDR SP 500 |
| BNY Mellon High |
SPDR SP and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and BNY Mellon
The main advantage of trading using opposite SPDR SP and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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 SP vs. FT Vest Equity | SPDR SP vs. Northern Lights | SPDR SP vs. Dimensional International High | SPDR SP vs. First Trust Exchange Traded |
| BNY Mellon vs. Credit Suisse Asset | BNY Mellon vs. Mfs Intermediate High | BNY Mellon vs. Eaton Vance Risk | BNY Mellon vs. Nuveen Floating Rate |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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