Correlation Between Amer Beacon and Bny Mellon

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

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

Diversification Opportunities for Amer Beacon and Bny Mellon

0.53

Correlation Coefficient

Amer Beacon  Bny Mellon

Very weak diversification

The 3 months correlation between Amer and Bny is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Amer Beacon Ark and Bny Mellon Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Mid and Amer Beacon 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 Amer Beacon Ark 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 Mid has no effect on the direction of Amer Beacon i.e., Amer Beacon and Bny Mellon go up and down completely randomly.

Pair Corralation between Amer Beacon and Bny Mellon

Assuming the 90 days horizon Amer Beacon Ark is expected to generate 2.82 times more return on investment than Bny Mellon. However, Amer Beacon is 2.82 times more volatile than Bny Mellon Mid. It trades about 0.17 of its potential returns per unit of risk. Bny Mellon Mid is currently generating about 0.29 per unit of risk. If you would invest  1,169  in Amer Beacon Ark on February 22, 2024 and sell it today you would earn a total of  83.00  from holding Amer Beacon Ark or generate 7.1% return on investment over 90 days.

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

Amer Beacon Ark  vs.  Bny Mellon Mid

Amer Beacon Ark

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bny Mellon Mid

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bny Mellon Mid are ranked lower than 6 (%) 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 Amer Beacon and Bny Mellon

The main advantage of trading using opposite Amer Beacon and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amer Beacon 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 Amer Beacon Ark and Bny Mellon Mid 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.