Correlation Between American Express and BNY Mellon

Can any of the company-specific risk be diversified away by investing in both American Express 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 Express 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 Express and BNY Mellon International, you can compare the effects of market volatilities on American Express 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 Express with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and BNY Mellon.

Diversification Opportunities for American Express and BNY Mellon

-0.46

Correlation Coefficient

American Express  BNY Mellon

Very good diversification

The 3 months correlation between American and BNY is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding American Express and BNY Mellon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon International and American Express 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 Express 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 International has no effect on the direction of American Express i.e., American Express and BNY Mellon go up and down completely randomly.

Pair Corralation between American Express and BNY Mellon

Considering the 90-day investment horizon American Express is expected to under-perform the BNY Mellon. In addition to that, American Express is 1.96 times more volatile than BNY Mellon International. It trades about -0.08 of its total potential returns per unit of risk. BNY Mellon International is currently generating about 0.15 per unit of volatility. If you would invest  7,289  in BNY Mellon International on December 27, 2024 and sell it today you would earn a total of  570.00  from holding BNY Mellon International or generate 7.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

American Express  vs.  BNY Mellon International

American Express

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Express has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

BNY Mellon International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BNY Mellon International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward indicators, BNY Mellon may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with American Express and BNY Mellon

The main advantage of trading using opposite American Express and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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 American Express and BNY Mellon International 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.