Correlation Between Rational Defensive and Bny Mellon

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

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

Diversification Opportunities for Rational Defensive and Bny Mellon

0.17

Correlation Coefficient

Rational Defensive  Bny Mellon

Average diversification

The 3 months correlation between Rational and Bny is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Rational Defensive Growth and Bny Mellon Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Small and Rational Defensive 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 Rational Defensive Growth 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 Small has no effect on the direction of Rational Defensive i.e., Rational Defensive and Bny Mellon go up and down completely randomly.

Pair Corralation between Rational Defensive and Bny Mellon

Assuming the 90 days horizon Rational Defensive is expected to generate 1.61 times less return on investment than Bny Mellon. In addition to that, Rational Defensive is 1.02 times more volatile than Bny Mellon Small. It trades about 0.14 of its total potential returns per unit of risk. Bny Mellon Small is currently generating about 0.23 per unit of volatility. If you would invest  2,012  in Bny Mellon Small on October 26, 2024 and sell it today you would earn a total of  82.00  from holding Bny Mellon Small or generate 4.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Rational Defensive Growth  vs.  Bny Mellon Small

Rational Defensive Growth

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rational Defensive Growth are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rational Defensive may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bny Mellon Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bny Mellon Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Rational Defensive and Bny Mellon

The main advantage of trading using opposite Rational Defensive and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rational Defensive 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 Rational Defensive Growth and Bny Mellon Small 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.