Correlation Between Swedbank Robur and BNY Mellon

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

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

Diversification Opportunities for Swedbank Robur and BNY Mellon

0.85

Correlation Coefficient

Swedbank Robur  BNY Mellon

Very poor diversification

The 3 months correlation between Swedbank and BNY is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank Robur Corporate 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 Swedbank Robur 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 Swedbank Robur Corporate 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 Swedbank Robur i.e., Swedbank Robur and BNY Mellon go up and down completely randomly.

Pair Corralation between Swedbank Robur and BNY Mellon

Assuming the 90 days trading horizon Swedbank Robur is expected to generate 1.89 times less return on investment than BNY Mellon. But when comparing it to its historical volatility, Swedbank Robur Corporate is 2.58 times less risky than BNY Mellon. It trades about 0.11 of its potential returns per unit of risk. BNY Mellon Global is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  164.00  in BNY Mellon Global on October 6, 2024 and sell it today you would earn a total of  3.00  from holding BNY Mellon Global or generate 1.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

Swedbank Robur Corporate  vs.  BNY Mellon Global

Swedbank Robur Corporate

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Swedbank Robur Corporate are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Swedbank Robur is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

BNY Mellon Global

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BNY Mellon Global are ranked lower than 6 (%) 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 Swedbank Robur and BNY Mellon

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

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.