Correlation Between Bny Mellon and Invesco Gold

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

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

Diversification Opportunities for Bny Mellon and Invesco Gold

0.18

Correlation Coefficient

Bny Mellon  Invesco Gold

Average diversification

The 3 months correlation between Bny and Invesco is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bny Mellon Income and Invesco Gold Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Gold Special 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 Income are associated (or correlated) with Invesco Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Gold Special has no effect on the direction of Bny Mellon i.e., Bny Mellon and Invesco Gold go up and down completely randomly.

Pair Corralation between Bny Mellon and Invesco Gold

Assuming the 90 days horizon Bny Mellon Income is expected to generate 0.44 times more return on investment than Invesco Gold. However, Bny Mellon Income is 2.28 times less risky than Invesco Gold. It trades about 0.25 of its potential returns per unit of risk. Invesco Gold Special is currently generating about -0.09 per unit of risk. If you would invest  828.00  in Bny Mellon Income on September 5, 2024 and sell it today you would earn a total of  40.00  from holding Bny Mellon Income or generate 4.83% return on investment over 90 days.

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

Bny Mellon Income  vs.  Invesco Gold Special

Bny Mellon Income

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bny Mellon Income are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Bny Mellon may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Invesco Gold Special

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Gold Special are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Invesco Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bny Mellon and Invesco Gold

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

The idea behind Bny Mellon Income and Invesco Gold Special 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 Global Correlations module to find global opportunities by holding instruments from different markets.