Correlation Between Accelerate Arbitrage and BMO Short
Can any of the company-specific risk be diversified away by investing in both Accelerate Arbitrage and BMO Short 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 Accelerate Arbitrage and BMO Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accelerate Arbitrage and BMO Short Term Bond, you can compare the effects of market volatilities on Accelerate Arbitrage and BMO Short 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 Accelerate Arbitrage with a short position of BMO Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accelerate Arbitrage and BMO Short.
Diversification Opportunities for Accelerate Arbitrage and BMO Short
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Accelerate and BMO is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Accelerate Arbitrage and BMO Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Short Term and Accelerate Arbitrage 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 Accelerate Arbitrage are associated (or correlated) with BMO Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Short Term has no effect on the direction of Accelerate Arbitrage i.e., Accelerate Arbitrage and BMO Short go up and down completely randomly.
Pair Corralation between Accelerate Arbitrage and BMO Short
Assuming the 90 days trading horizon Accelerate Arbitrage is expected to generate 10.29 times more return on investment than BMO Short. However, Accelerate Arbitrage is 10.29 times more volatile than BMO Short Term Bond. It trades about 0.02 of its potential returns per unit of risk. BMO Short Term Bond is currently generating about 0.1 per unit of risk. If you would invest 2,372 in Accelerate Arbitrage on September 1, 2024 and sell it today you would earn a total of 253.00 from holding Accelerate Arbitrage or generate 10.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 92.32% |
| Values | Daily Returns |
Accelerate Arbitrage vs. BMO Short Term Bond
Performance |
| Timeline |
| Accelerate Arbitrage |
| BMO Short Term |
Accelerate Arbitrage and BMO Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Accelerate Arbitrage and BMO Short
The main advantage of trading using opposite Accelerate Arbitrage and BMO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accelerate Arbitrage position performs unexpectedly, BMO Short 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 BMO Short will offset losses from the drop in BMO Short's long position.The idea behind Accelerate Arbitrage and BMO Short Term Bond 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.
| BMO Short vs. BMO Corporate Bond | BMO Short vs. BMO Government Bond | BMO Short vs. BMO Ultra Short Term | BMO Short vs. BMO Short Term IG |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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