Correlation Between BNY Mellon and Pgim Global

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

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

Diversification Opportunities for BNY Mellon and Pgim Global

0.41

Correlation Coefficient

BNY Mellon  Pgim Global

Very weak diversification

The 3 months correlation between BNY and Pgim is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon High and Pgim Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Global High 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 High are associated (or correlated) with Pgim Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pgim Global High has no effect on the direction of BNY Mellon i.e., BNY Mellon and Pgim Global go up and down completely randomly.

Pair Corralation between BNY Mellon and Pgim Global

Considering the 90-day investment horizon BNY Mellon is expected to generate 25.1 times less return on investment than Pgim Global. But when comparing it to its historical volatility, BNY Mellon High is 1.51 times less risky than Pgim Global. It trades about 0.01 of its potential returns per unit of risk. Pgim Global High is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,233  in Pgim Global High on December 25, 2024 and sell it today you would earn a total of  130.00  from holding Pgim Global High or generate 10.54% return on investment over 90 days.

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

BNY Mellon High  vs.  Pgim Global High

BNY Mellon High

Risk-Adjusted Performance

Very Weak

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

Pgim Global High

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Global High are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady technical indicators, Pgim Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BNY Mellon and Pgim Global

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

The idea behind BNY Mellon High and Pgim Global High 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.