Correlation Between BNY Mellon and JPM Global

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

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

Diversification Opportunities for BNY Mellon and JPM Global

0.41

Correlation Coefficient

BNY Mellon  JPM Global

Very weak diversification

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

Pair Corralation between BNY Mellon and JPM Global

Assuming the 90 days trading horizon BNY Mellon Global is expected to under-perform the JPM Global. But the fund apears to be less risky and, when comparing its historical volatility, BNY Mellon Global is 1.9 times less risky than JPM Global. The fund trades about -0.03 of its potential returns per unit of risk. The JPM Global Natural is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,017  in JPM Global Natural on December 27, 2024 and sell it today you would earn a total of  169.00  from holding JPM Global Natural or generate 8.38% return on investment over 90 days.

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

BNY Mellon Global  vs.  JPM Global Natural

BNY Mellon Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days BNY Mellon Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, BNY Mellon is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

JPM Global Natural

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPM Global Natural are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak technical and fundamental indicators, JPM Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BNY Mellon and JPM Global

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

The idea behind BNY Mellon Global and JPM Global Natural 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.