Correlation Between WisdomTree Floating and BNY Mellon

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

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

Diversification Opportunities for WisdomTree Floating and BNY Mellon

0.97

Correlation Coefficient

WisdomTree Floating  BNY Mellon

Almost no diversification

The 3 months correlation between WisdomTree and BNY is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Floating Rate 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 WisdomTree Floating 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 WisdomTree Floating Rate 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 WisdomTree Floating i.e., WisdomTree Floating and BNY Mellon go up and down completely randomly.

Pair Corralation between WisdomTree Floating and BNY Mellon

Given the investment horizon of 90 days WisdomTree Floating Rate is expected to generate 0.77 times more return on investment than BNY Mellon. However, WisdomTree Floating Rate is 1.3 times less risky than BNY Mellon. It trades about 0.93 of its potential returns per unit of risk. BNY Mellon ETF is currently generating about 0.67 per unit of risk. If you would invest  4,968  in WisdomTree Floating Rate on September 3, 2024 and sell it today you would earn a total of  62.00  from holding WisdomTree Floating Rate or generate 1.25% return on investment over 90 days.

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

WisdomTree Floating Rate  vs.  BNY Mellon ETF

WisdomTree Floating Rate

Risk-Adjusted Performance

73 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Floating Rate are ranked lower than 73 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, WisdomTree Floating is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

BNY Mellon ETF

Risk-Adjusted Performance

52 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in BNY Mellon ETF are ranked lower than 52 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, BNY Mellon is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with WisdomTree Floating and BNY Mellon

The main advantage of trading using opposite WisdomTree Floating and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Floating 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 WisdomTree Floating Rate 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.