Correlation Between Barings Global and BNY Mellon

Can any of the company-specific risk be diversified away by investing in both Barings Global 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 Barings Global and BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barings Global Umbrella and BNY Mellon Global, you can compare the effects of market volatilities on Barings Global 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 Barings Global with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Global and BNY Mellon.

Diversification Opportunities for Barings Global and BNY Mellon

0.68

Correlation Coefficient

Barings Global  BNY Mellon

Poor diversification

The 3 months correlation between Barings and BNY is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Umbrella and BNY Mellon Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon Global and Barings Global 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 Barings Global Umbrella 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 Global has no effect on the direction of Barings Global i.e., Barings Global and BNY Mellon go up and down completely randomly.

Pair Corralation between Barings Global and BNY Mellon

Assuming the 90 days trading horizon Barings Global Umbrella is expected to generate 0.85 times more return on investment than BNY Mellon. However, Barings Global Umbrella is 1.17 times less risky than BNY Mellon. It trades about 0.16 of its potential returns per unit of risk. BNY Mellon Global is currently generating about 0.03 per unit of risk. If you would invest  631.00  in Barings Global Umbrella on October 1, 2024 and sell it today you would earn a total of  115.00  from holding Barings Global Umbrella or generate 18.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	74.57%
Values	Daily Returns

Barings Global Umbrella  vs.  BNY Mellon Global

Barings Global Umbrella

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Global Umbrella are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unsteady basic indicators, Barings Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BNY Mellon Global

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BNY Mellon Global are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, BNY Mellon is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Barings Global and BNY Mellon

The main advantage of trading using opposite Barings Global and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Global 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 Barings Global Umbrella and BNY Mellon Global 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.