Correlation Between FMC and Bny Mellon

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

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

Diversification Opportunities for FMC and Bny Mellon

0.65

Correlation Coefficient

FMC  Bny Mellon

Poor diversification

The 3 months correlation between FMC and Bny is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding FMC Corp. and Bny Mellon Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Mid and FMC 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 FMC Corporation 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 Mid has no effect on the direction of FMC i.e., FMC and Bny Mellon go up and down completely randomly.

Pair Corralation between FMC and Bny Mellon

Considering the 90-day investment horizon FMC Corporation is expected to generate 1.72 times more return on investment than Bny Mellon. However, FMC is 1.72 times more volatile than Bny Mellon Mid. It trades about -0.01 of its potential returns per unit of risk. Bny Mellon Mid is currently generating about -0.02 per unit of risk. If you would invest  5,973  in FMC Corporation on October 5, 2024 and sell it today you would lose (1,120) from holding FMC Corporation or give up 18.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.68%
Values	Daily Returns

FMC Corp.  vs.  Bny Mellon Mid

FMC Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FMC Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Bny Mellon Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bny Mellon Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with FMC and Bny Mellon

The main advantage of trading using opposite FMC and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FMC 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 FMC Corporation and Bny Mellon Mid 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..