Correlation Between Dnyax and Bny Mellon

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

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

Diversification Opportunities for Dnyax and Bny Mellon

0.61

Correlation Coefficient

Dnyax  Bny Mellon

Poor diversification

The 3 months correlation between Dnyax and Bny is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dnyax and Bny Mellon Insight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Insight and Dnyax 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 Dnyax 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 Insight has no effect on the direction of Dnyax i.e., Dnyax and Bny Mellon go up and down completely randomly.

Pair Corralation between Dnyax and Bny Mellon

Assuming the 90 days horizon Dnyax is expected to generate 1.89 times less return on investment than Bny Mellon. But when comparing it to its historical volatility, Dnyax is 1.36 times less risky than Bny Mellon. It trades about 0.02 of its potential returns per unit of risk. Bny Mellon Insight is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  901.00  in Bny Mellon Insight on September 23, 2024 and sell it today you would earn a total of  9.00  from holding Bny Mellon Insight or generate 1.0% return on investment over 90 days.

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

Dnyax  vs.  Bny Mellon Insight

Dnyax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dnyax has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Dnyax is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bny Mellon Insight

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bny Mellon Insight has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Bny Mellon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dnyax and Bny Mellon

The main advantage of trading using opposite Dnyax and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dnyax 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 Dnyax and Bny Mellon Insight 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.