BANK OF NEW YORK MELLON CORP

48.09 +0.03 (+0.06%) Sell

Profit booking on the minds of BK investors as it marginally outperforms

13 min read

BANK OF NEW YORK MELLON CORP performed better than the broader market on Thursday. It returned +0.06% to close at 48.09. On a day when the overall market breadth was 35%, it closed higher than 11% of the market. In comparison, the benchmark SP500 index closed today at -0.0002%.

[Themes containing BK]

BK is currently in a down trend. Over the last three months 3 bearish signals have generated a profit of +3.3% for investors.

Trend

BK has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 9 days, BK underperformed the SP500 index on 47% days. Which indicates that on days BK underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months BK was mostly loss making and delivered on average -0.1% per day. It's best return during this period (of +2.51%) was on Tuesday, 30 Oct, 2018. While it's worst loss in the same period (of -3.83%) was on Tuesday, 4 Dec, 2018. There was initially a bearish trend during this period which started on 17 Oct, 2018 and went on till 24 Oct, 2018. The trend delivered -8.42% losses to investors. This was followed by a bullish trend that started on 13 Nov, 2018 and ended on 19 Nov, 2018. This bullish trend delivered +4.4% to investors.

BK had 5 profitable and 7 loss making months over the last year. During the last year, BK underperformed SP500 index on monthly return basis. BK was also a more risky investment than SP500 index as it's worst month in the last year, Mar 2018, returned -9.64% compared to -7.28% returned by SP500 index in Oct 2018. BK had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Jun 2018 to Oct 2018) during which period it delivered -16.15%. It is interesting to note that both BK and SP500 index significantly outperform during months when quarterly/annual results are announced.

"Finance is wholly different from the rest the economy.

BK is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in BK's volatility from 14 Sep, 2018 to 12 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that BK has significant positive skewness in it's return distribution. This indicates that investors can expect BK to recover from drawdowns quickly. Which makes BK a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in BK derivatives at this moment can consider 'Bear Put Spread' options strategy to receive better risk-adjusted returns.

BK has more chance of extreme outcomes than the SP500 index. Therefore, BK must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than BK.

Based on your interest in BK you may find it interesting to know that AMZN, UNH and CSCO are large caps that have all shown remarkable performance and qualify to be on every investor's watchlist.

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