Correlation Between BNY Mellon and BlackRock ETF

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

By analyzing existing cross correlation between BNY Mellon ETF and BlackRock ETF Trust, you can compare the effects of market volatilities on BNY Mellon and BlackRock ETF 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 BlackRock ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNY Mellon and BlackRock ETF.

Diversification Opportunities for BNY Mellon and BlackRock ETF

-0.45

Correlation Coefficient

BNY Mellon  BlackRock ETF

Very good diversification

The 3 months correlation between BNY and BlackRock is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon ETF and BlackRock ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock ETF Trust 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 ETF are associated (or correlated) with BlackRock ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock ETF Trust has no effect on the direction of BNY Mellon i.e., BNY Mellon and BlackRock ETF go up and down completely randomly.

Pair Corralation between BNY Mellon and BlackRock ETF

Given the investment horizon of 90 days BNY Mellon ETF is expected to under-perform the BlackRock ETF. In addition to that, BNY Mellon is 1.28 times more volatile than BlackRock ETF Trust. It trades about -0.16 of its total potential returns per unit of risk. BlackRock ETF Trust is currently generating about 0.25 per unit of volatility. If you would invest  3,233  in BlackRock ETF Trust on September 20, 2024 and sell it today you would earn a total of  79.00  from holding BlackRock ETF Trust or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	23.81%
Values	Daily Returns

BNY Mellon ETF  vs.  BlackRock ETF Trust

BNY Mellon ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNY Mellon ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Etf's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

BlackRock ETF Trust

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days BlackRock ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very fragile technical indicators, BlackRock ETF may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BNY Mellon and BlackRock ETF

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

The idea behind BNY Mellon ETF and BlackRock ETF Trust 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.