Correlation Between BNY Mellon and IShares MSCI

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

By analyzing existing cross correlation between BNY Mellon International and iShares MSCI Intl, you can compare the effects of market volatilities on BNY Mellon and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNY Mellon and IShares MSCI.

Diversification Opportunities for BNY Mellon and IShares MSCI

0.98

Correlation Coefficient

BNY Mellon  IShares MSCI

Almost no diversification

The 3 months correlation between BNY and IShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon International and iShares MSCI Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Intl 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 International are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Intl has no effect on the direction of BNY Mellon i.e., BNY Mellon and IShares MSCI go up and down completely randomly.

Pair Corralation between BNY Mellon and IShares MSCI

Given the investment horizon of 90 days BNY Mellon International is expected to generate 0.97 times more return on investment than IShares MSCI. However, BNY Mellon International is 1.03 times less risky than IShares MSCI. It trades about 0.15 of its potential returns per unit of risk. iShares MSCI Intl is currently generating about 0.11 per unit of risk. 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 Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

BNY Mellon International  vs.  iShares MSCI Intl

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.

iShares MSCI Intl

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Intl are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BNY Mellon and IShares MSCI

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

The idea behind BNY Mellon International and iShares MSCI Intl 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.