Correlation Between IShares SP and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both IShares SP 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 IShares SP and BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP 500 and BNY Mellon ETF, you can compare the effects of market volatilities on IShares SP 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 IShares SP with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and BNY Mellon.
Diversification Opportunities for IShares SP and BNY Mellon
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and BNY is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 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 IShares SP 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 iShares SP 500 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 IShares SP i.e., IShares SP and BNY Mellon go up and down completely randomly.
Pair Corralation between IShares SP and BNY Mellon
Considering the 90-day investment horizon iShares SP 500 is expected to generate 0.62 times more return on investment than BNY Mellon. However, iShares SP 500 is 1.62 times less risky than BNY Mellon. It trades about -0.49 of its potential returns per unit of risk. BNY Mellon ETF is currently generating about -0.42 per unit of risk. If you would invest 20,409 in iShares SP 500 on September 24, 2024 and sell it today you would lose (1,238) from holding iShares SP 500 or give up 6.07% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
iShares SP 500 vs. BNY Mellon ETF
Performance |
Timeline |
iShares SP 500 |
BNY Mellon ETF |
IShares SP and BNY Mellon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares SP and BNY Mellon
The main advantage of trading using opposite IShares SP and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP 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.IShares SP vs. Salon City | IShares SP vs. Northern Lights | IShares SP vs. Sterling Capital Focus | IShares SP vs. Aquagold International |
BNY Mellon vs. iShares Core SP | BNY Mellon vs. iShares Core SP | BNY Mellon vs. iShares SP Small Cap | BNY Mellon vs. iShares SP 500 |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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