Correlation Between Bny Mellon and M Large

Can any of the company-specific risk be diversified away by investing in both Bny Mellon and M Large 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 M Large 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 M Large Cap, you can compare the effects of market volatilities on Bny Mellon and M Large 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 M Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bny Mellon and M Large.

Diversification Opportunities for Bny Mellon and M Large

0.57

Correlation Coefficient

Bny Mellon  M Large

Very weak diversification

The 3 months correlation between Bny and MTCGX is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bny Mellon Small and M Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Large Cap 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 M Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Large Cap has no effect on the direction of Bny Mellon i.e., Bny Mellon and M Large go up and down completely randomly.

Pair Corralation between Bny Mellon and M Large

Assuming the 90 days horizon Bny Mellon is expected to generate 5.88 times less return on investment than M Large. But when comparing it to its historical volatility, Bny Mellon Small is 1.01 times less risky than M Large. It trades about 0.01 of its potential returns per unit of risk. M Large Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,393  in M Large Cap on October 9, 2024 and sell it today you would earn a total of  1,051  from holding M Large Cap or generate 43.92% return on investment over 90 days.

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

Bny Mellon Small  vs.  M Large Cap

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.

M Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days M Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, M Large 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 M Large

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

The idea behind Bny Mellon Small and M Large Cap 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.