Correlation Between FT Vest and BNY Mellon

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

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

Diversification Opportunities for FT Vest and BNY Mellon

0.68

Correlation Coefficient

FT Vest  BNY Mellon

Poor diversification

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

Pair Corralation between FT Vest and BNY Mellon

Given the investment horizon of 90 days FT Vest Equity is expected to under-perform the BNY Mellon. But the etf apears to be less risky and, when comparing its historical volatility, FT Vest Equity is 1.46 times less risky than BNY Mellon. The etf trades about -0.08 of its potential returns per unit of risk. The BNY Mellon ETF is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,493  in BNY Mellon ETF on December 26, 2024 and sell it today you would earn a total of  59.00  from holding BNY Mellon ETF or generate 2.37% return on investment over 90 days.

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

FT Vest Equity  vs.  BNY Mellon ETF

FT Vest Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days FT Vest Equity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, FT Vest is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

BNY Mellon ETF

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BNY Mellon ETF are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, BNY Mellon is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with FT Vest and BNY Mellon

The main advantage of trading using opposite FT Vest and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Vest 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 FT Vest Equity and BNY Mellon ETF 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.