Correlation Between Mid Cap and Bny Mellon

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

By analyzing existing cross correlation between Mid Cap Index and Bny Mellon Strategic, you can compare the effects of market volatilities on Mid Cap 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 Mid Cap with a short position of Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Bny Mellon.

Diversification Opportunities for Mid Cap and Bny Mellon

-0.09

Correlation Coefficient

Mid Cap  Bny Mellon

Good diversification

The 3 months correlation between Mid and Bny is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Index and Bny Mellon Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Strategic and Mid Cap 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 Mid Cap Index 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 Strategic has no effect on the direction of Mid Cap i.e., Mid Cap and Bny Mellon go up and down completely randomly.

Pair Corralation between Mid Cap and Bny Mellon

Assuming the 90 days horizon Mid Cap Index is expected to under-perform the Bny Mellon. In addition to that, Mid Cap is 3.09 times more volatile than Bny Mellon Strategic. It trades about -0.14 of its total potential returns per unit of risk. Bny Mellon Strategic is currently generating about 0.05 per unit of volatility. If you would invest  571.00  in Bny Mellon Strategic on December 26, 2024 and sell it today you would earn a total of  11.00  from holding Bny Mellon Strategic or generate 1.93% return on investment over 90 days.

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

Mid Cap Index  vs.  Bny Mellon Strategic

Mid Cap Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mid Cap Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Bny Mellon Strategic

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bny Mellon Strategic are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Bny Mellon is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mid Cap and Bny Mellon

The main advantage of trading using opposite Mid Cap and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap 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 Mid Cap Index and Bny Mellon Strategic 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.