Correlation Between FlexShares STOXX and BNY Mellon

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

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

Diversification Opportunities for FlexShares STOXX and BNY Mellon

0.32

Correlation Coefficient

FlexShares STOXX  BNY Mellon

Weak diversification

The 3 months correlation between FlexShares and BNY is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares STOXX Global 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 FlexShares STOXX 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 FlexShares STOXX Global 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 FlexShares STOXX i.e., FlexShares STOXX and BNY Mellon go up and down completely randomly.

Pair Corralation between FlexShares STOXX and BNY Mellon

Given the investment horizon of 90 days FlexShares STOXX is expected to generate 2.15 times less return on investment than BNY Mellon. In addition to that, FlexShares STOXX is 33.87 times more volatile than BNY Mellon ETF. It trades about 0.01 of its total potential returns per unit of risk. BNY Mellon ETF is currently generating about 0.85 per unit of volatility. If you would invest  4,920  in BNY Mellon ETF on December 29, 2024 and sell it today you would earn a total of  65.00  from holding BNY Mellon ETF or generate 1.32% return on investment over 90 days.

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

FlexShares STOXX Global  vs.  BNY Mellon ETF

FlexShares STOXX Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days FlexShares STOXX Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, FlexShares STOXX 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

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in BNY Mellon ETF are ranked lower than 67 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, BNY Mellon is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with FlexShares STOXX and BNY Mellon

The main advantage of trading using opposite FlexShares STOXX and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares STOXX 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 FlexShares STOXX Global 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.