Correlation Between Investec Emerging and Bny Mellon

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

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

Diversification Opportunities for Investec Emerging and Bny Mellon

0.33

Correlation Coefficient

Investec Emerging  Bny Mellon

Weak diversification

The 3 months correlation between Investec and Bny is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Bny Mellon Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Small and Investec Emerging 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 Investec Emerging Markets 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 Small has no effect on the direction of Investec Emerging i.e., Investec Emerging and Bny Mellon go up and down completely randomly.

Pair Corralation between Investec Emerging and Bny Mellon

Assuming the 90 days horizon Investec Emerging Markets is expected to generate 0.29 times more return on investment than Bny Mellon. However, Investec Emerging Markets is 3.46 times less risky than Bny Mellon. It trades about -0.48 of its potential returns per unit of risk. Bny Mellon Small is currently generating about -0.28 per unit of risk. If you would invest  1,102  in Investec Emerging Markets on October 16, 2024 and sell it today you would lose (73.00) from holding Investec Emerging Markets or give up 6.62% of portfolio value over 90 days.

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

Investec Emerging Markets  vs.  Bny Mellon Small

Investec Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investec Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

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 latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Investec Emerging and Bny Mellon

The main advantage of trading using opposite Investec Emerging and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging 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 Investec Emerging Markets and Bny Mellon Small 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.