Correlation Between National Tax and Bny Mellon

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

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

Diversification Opportunities for National Tax and Bny Mellon

-0.25

Correlation Coefficient

National Tax  Bny Mellon

Very good diversification

The 3 months correlation between National and Bny is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and Bny Mellon Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Income and National Tax 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 The National Tax Free 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 Income has no effect on the direction of National Tax i.e., National Tax and Bny Mellon go up and down completely randomly.

Pair Corralation between National Tax and Bny Mellon

Assuming the 90 days horizon The National Tax Free is expected to generate 0.16 times more return on investment than Bny Mellon. However, The National Tax Free is 6.44 times less risky than Bny Mellon. It trades about 0.49 of its potential returns per unit of risk. Bny Mellon Income is currently generating about -0.23 per unit of risk. If you would invest  1,863  in The National Tax Free on September 12, 2024 and sell it today you would earn a total of  19.00  from holding The National Tax Free or generate 1.02% return on investment over 90 days.

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

The National Tax Free  vs.  Bny Mellon Income

National Tax

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The National Tax Free are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, National Tax is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bny Mellon Income

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bny Mellon Income are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Bny Mellon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with National Tax and Bny Mellon

The main advantage of trading using opposite National Tax and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Tax 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 The National Tax Free and Bny Mellon Income 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.