Correlation Between Brompton Global and BMO Corporate
Can any of the company-specific risk be diversified away by investing in both Brompton Global and BMO Corporate 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 Brompton Global and BMO Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brompton Global Dividend and BMO Corporate Bond, you can compare the effects of market volatilities on Brompton Global and BMO Corporate 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 Brompton Global with a short position of BMO Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton Global and BMO Corporate.
Diversification Opportunities for Brompton Global and BMO Corporate
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brompton and BMO is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Brompton Global Dividend and BMO Corporate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Corporate Bond and Brompton Global 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 Brompton Global Dividend are associated (or correlated) with BMO Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Corporate Bond has no effect on the direction of Brompton Global i.e., Brompton Global and BMO Corporate go up and down completely randomly.
Pair Corralation between Brompton Global and BMO Corporate
Assuming the 90 days trading horizon Brompton Global Dividend is expected to generate 2.02 times more return on investment than BMO Corporate. However, Brompton Global is 2.02 times more volatile than BMO Corporate Bond. It trades about 0.13 of its potential returns per unit of risk. BMO Corporate Bond is currently generating about 0.07 per unit of risk. If you would invest 1,485 in Brompton Global Dividend on December 1, 2024 and sell it today you would earn a total of 807.00 from holding Brompton Global Dividend or generate 54.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brompton Global Dividend vs. BMO Corporate Bond
Performance |
| Timeline |
| Brompton Global Dividend |
| BMO Corporate Bond |
Brompton Global and BMO Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton Global and BMO Corporate
The main advantage of trading using opposite Brompton Global and BMO Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton Global position performs unexpectedly, BMO Corporate 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 Corporate will offset losses from the drop in BMO Corporate's long position.| Brompton Global vs. Global Healthcare Income | Brompton Global vs. Tech Leaders Income | Brompton Global vs. Brompton North American | Brompton Global vs. Brompton European Dividend |
| BMO Corporate vs. BMO Government Bond | BMO Corporate vs. BMO High Yield | BMO Corporate vs. BMO Long Corporate | BMO Corporate vs. BMO Long Provincial |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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