Correlation Between Us Government and Bny Mellon

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

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

Diversification Opportunities for Us Government and Bny Mellon

-0.67

Correlation Coefficient

Us Government  Bny Mellon

Excellent diversification

The 3 months correlation between UGSFX and Bny is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities and Bny Mellon Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Small and Us Government 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 Us Government Securities 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 Small has no effect on the direction of Us Government i.e., Us Government and Bny Mellon go up and down completely randomly.

Pair Corralation between Us Government and Bny Mellon

Assuming the 90 days horizon Us Government is expected to generate 24.74 times less return on investment than Bny Mellon. But when comparing it to its historical volatility, Us Government Securities is 4.34 times less risky than Bny Mellon. It trades about 0.05 of its potential returns per unit of risk. Bny Mellon Small is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  2,163  in Bny Mellon Small on September 5, 2024 and sell it today you would earn a total of  189.00  from holding Bny Mellon Small or generate 8.74% return on investment over 90 days.

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

Us Government Securities  vs.  Bny Mellon Small

Us Government Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Us Government Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Us Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bny Mellon Small

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bny Mellon Small 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 showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Us Government and Bny Mellon

The main advantage of trading using opposite Us Government and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government 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 Us Government Securities and Bny Mellon Small 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..