Correlation Between Bny Mellon and Icon Natural

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

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

Diversification Opportunities for Bny Mellon and Icon Natural

0.74

Correlation Coefficient

Bny Mellon  Icon Natural

Poor diversification

The 3 months correlation between Bny and Icon is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bny Mellon Small and Icon Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Natural Resources 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 Small are associated (or correlated) with Icon Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Natural Resources has no effect on the direction of Bny Mellon i.e., Bny Mellon and Icon Natural go up and down completely randomly.

Pair Corralation between Bny Mellon and Icon Natural

Assuming the 90 days horizon Bny Mellon is expected to generate 1.29 times less return on investment than Icon Natural. In addition to that, Bny Mellon is 1.1 times more volatile than Icon Natural Resources. It trades about 0.25 of its total potential returns per unit of risk. Icon Natural Resources is currently generating about 0.35 per unit of volatility. If you would invest  1,689  in Icon Natural Resources on October 22, 2024 and sell it today you would earn a total of  85.00  from holding Icon Natural Resources or generate 5.03% return on investment over 90 days.

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

Bny Mellon Small  vs.  Icon Natural Resources

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 fundamental indicators, Bny Mellon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Icon Natural Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icon Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Icon Natural is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bny Mellon and Icon Natural

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

The idea behind Bny Mellon Small and Icon Natural Resources 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.