Correlation Between Bny Mellon and Small Cap

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

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

Diversification Opportunities for Bny Mellon and Small Cap

-0.52

Correlation Coefficient

Bny Mellon  Small Cap

Excellent diversification

The 3 months correlation between Bny and Small is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bny Mellon International and Small Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Stock 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 International are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Stock has no effect on the direction of Bny Mellon i.e., Bny Mellon and Small Cap go up and down completely randomly.

Pair Corralation between Bny Mellon and Small Cap

If you would invest  1,346  in Bny Mellon International on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Bny Mellon International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.69%
Values	Daily Returns

Bny Mellon International  vs.  Small Cap Stock

Bny Mellon International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Small Cap Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Small Cap Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Small Cap 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 Small Cap

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

The idea behind Bny Mellon International and Small Cap Stock 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.