Correlation Between BNY Mellon and WisdomTree International

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

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

Diversification Opportunities for BNY Mellon and WisdomTree International

0.85

Correlation Coefficient

BNY Mellon  WisdomTree International

Very poor diversification

The 3 months correlation between BNY and WisdomTree is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon ETF and WisdomTree International Hedge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International and BNY Mellon 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 BNY Mellon ETF are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of BNY Mellon i.e., BNY Mellon and WisdomTree International go up and down completely randomly.

Pair Corralation between BNY Mellon and WisdomTree International

Given the investment horizon of 90 days BNY Mellon is expected to generate 1.04 times less return on investment than WisdomTree International. In addition to that, BNY Mellon is 1.1 times more volatile than WisdomTree International Hedged. It trades about 0.02 of its total potential returns per unit of risk. WisdomTree International Hedged is currently generating about 0.02 per unit of volatility. If you would invest  4,336  in WisdomTree International Hedged on December 29, 2024 and sell it today you would earn a total of  43.00  from holding WisdomTree International Hedged or generate 0.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

BNY Mellon ETF  vs.  WisdomTree International Hedge

BNY Mellon ETF

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BNY Mellon ETF are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, BNY Mellon is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

WisdomTree International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree International Hedged are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, WisdomTree International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BNY Mellon and WisdomTree International

The main advantage of trading using opposite BNY Mellon and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNY Mellon position performs unexpectedly, WisdomTree International 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 WisdomTree International will offset losses from the drop in WisdomTree International's long position.

The idea behind BNY Mellon ETF and WisdomTree International Hedged 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.