Correlation Between Banco Bilbao and Bank of Montreal
Can any of the company-specific risk be diversified away by investing in both Banco Bilbao and Bank of Montreal 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 Banco Bilbao and Bank of Montreal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Bilbao Viscaya and Bank of Montreal, you can compare the effects of market volatilities on Banco Bilbao and Bank of Montreal 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 Banco Bilbao with a short position of Bank of Montreal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bilbao and Bank of Montreal.
Diversification Opportunities for Banco Bilbao and Bank of Montreal
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banco and Bank is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bilbao Viscaya and Bank of Montreal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Montreal and Banco Bilbao 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 Banco Bilbao Viscaya are associated (or correlated) with Bank of Montreal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Montreal has no effect on the direction of Banco Bilbao i.e., Banco Bilbao and Bank of Montreal go up and down completely randomly.
Pair Corralation between Banco Bilbao and Bank of Montreal
Given the investment horizon of 90 days Banco Bilbao is expected to generate 2.15 times less return on investment than Bank of Montreal. In addition to that, Banco Bilbao is 1.26 times more volatile than Bank of Montreal. It trades about 0.08 of its total potential returns per unit of risk. Bank of Montreal is currently generating about 0.23 per unit of volatility. If you would invest 9,409 in Bank of Montreal on September 12, 2024 and sell it today you would earn a total of 665.00 from holding Bank of Montreal or generate 7.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Bilbao Viscaya vs. Bank of Montreal
Performance |
| Timeline |
| Banco Bilbao Viscaya |
| Bank of Montreal |
Banco Bilbao and Bank of Montreal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bilbao and Bank of Montreal
The main advantage of trading using opposite Banco Bilbao and Bank of Montreal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bilbao position performs unexpectedly, Bank of Montreal 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 Bank of Montreal will offset losses from the drop in Bank of Montreal's long position.| Banco Bilbao vs. Barclays PLC ADR | Banco Bilbao vs. ING Group NV | Banco Bilbao vs. Banco Santander SA | Banco Bilbao vs. HSBC Holdings PLC |
| Bank of Montreal vs. Bank of America | Bank of Montreal vs. Victory Integrity Smallmid Cap | Bank of Montreal vs. Hilton Worldwide Holdings | Bank of Montreal vs. NVIDIA |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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