Correlation Between T Rex and BNY Mellon

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

By analyzing existing cross correlation between T Rex 2X Long and BNY Mellon ETF, you can compare the effects of market volatilities on T Rex 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 T Rex with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and BNY Mellon.

Diversification Opportunities for T Rex and BNY Mellon

-0.44

Correlation Coefficient

T Rex  BNY Mellon

Very good diversification

The 3 months correlation between NVDX and BNY is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long 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 T Rex 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 T Rex 2X Long 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 T Rex i.e., T Rex and BNY Mellon go up and down completely randomly.

Pair Corralation between T Rex and BNY Mellon

Given the investment horizon of 90 days T Rex 2X Long is expected to generate 5.45 times more return on investment than BNY Mellon. However, T Rex is 5.45 times more volatile than BNY Mellon ETF. It trades about 0.15 of its potential returns per unit of risk. BNY Mellon ETF is currently generating about 0.34 per unit of risk. If you would invest  1,147  in T Rex 2X Long on September 2, 2024 and sell it today you would earn a total of  595.00  from holding T Rex 2X Long or generate 51.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	31.25%
Values	Daily Returns

T Rex 2X Long  vs.  BNY Mellon ETF

T Rex 2X

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in T Rex 2X Long are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, T Rex showed solid returns over the last few months and may actually be approaching a breakup point.

BNY Mellon ETF

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in BNY Mellon ETF are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, BNY Mellon showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with T Rex and BNY Mellon

The main advantage of trading using opposite T Rex and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex 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 T Rex 2X Long and BNY Mellon ETF 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.