Correlation Between IShares Currency and BNY Mellon

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

By analyzing existing cross correlation between iShares Currency Hedged and BNY Mellon ETF, you can compare the effects of market volatilities on IShares Currency 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 IShares Currency with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Currency and BNY Mellon.

Diversification Opportunities for IShares Currency and BNY Mellon

0.4

Correlation Coefficient

IShares Currency  BNY Mellon

Very weak diversification

The 3 months correlation between IShares and BNY is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding iShares Currency Hedged and BNY Mellon ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon ETF and IShares Currency 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 iShares Currency Hedged 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 ETF has no effect on the direction of IShares Currency i.e., IShares Currency and BNY Mellon go up and down completely randomly.

Pair Corralation between IShares Currency and BNY Mellon

Given the investment horizon of 90 days iShares Currency Hedged is expected to generate 0.8 times more return on investment than BNY Mellon. However, iShares Currency Hedged is 1.24 times less risky than BNY Mellon. It trades about -0.02 of its potential returns per unit of risk. BNY Mellon ETF is currently generating about -0.2 per unit of risk. If you would invest  3,459  in iShares Currency Hedged on September 24, 2024 and sell it today you would lose (32.00) from holding iShares Currency Hedged or give up 0.93% of portfolio value over 90 days.

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

iShares Currency Hedged  vs.  BNY Mellon ETF

iShares Currency Hedged

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Currency Hedged has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, IShares Currency is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 unsteady 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.

Pair Trading with IShares Currency and BNY Mellon

The main advantage of trading using opposite IShares Currency and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Currency 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 iShares Currency Hedged and BNY Mellon ETF 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..