Correlation Between Dreyfus New and Bny Mellon

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

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

Diversification Opportunities for Dreyfus New and Bny Mellon

0.79

Correlation Coefficient

Dreyfus New  Bny Mellon

Poor diversification

The 3 months correlation between Dreyfus and Bny is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus New York and Bny Mellon Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Short and Dreyfus New 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 Dreyfus New York 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 Short has no effect on the direction of Dreyfus New i.e., Dreyfus New and Bny Mellon go up and down completely randomly.

Pair Corralation between Dreyfus New and Bny Mellon

Assuming the 90 days horizon Dreyfus New York is expected to generate 2.01 times more return on investment than Bny Mellon. However, Dreyfus New is 2.01 times more volatile than Bny Mellon Short. It trades about 0.06 of its potential returns per unit of risk. Bny Mellon Short is currently generating about 0.04 per unit of risk. If you would invest  1,370  in Dreyfus New York on September 1, 2024 and sell it today you would earn a total of  12.00  from holding Dreyfus New York or generate 0.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Dreyfus New York  vs.  Bny Mellon Short

Dreyfus New York

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus New York are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Dreyfus New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bny Mellon Short

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bny Mellon Short are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward 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 Dreyfus New and Bny Mellon

The main advantage of trading using opposite Dreyfus New and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus New 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 Dreyfus New York and Bny Mellon Short 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.