Correlation Between Bank of Montreal and Canadian National
Can any of the company-specific risk be diversified away by investing in both Bank of Montreal and Canadian National 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 Bank of Montreal and Canadian National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Montreal and Canadian National Railway, you can compare the effects of market volatilities on Bank of Montreal and Canadian National 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 Bank of Montreal with a short position of Canadian National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Montreal and Canadian National.
Diversification Opportunities for Bank of Montreal and Canadian National
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Canadian is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Montreal and Canadian National Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian National Railway and Bank of Montreal 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 Bank of Montreal are associated (or correlated) with Canadian National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian National Railway has no effect on the direction of Bank of Montreal i.e., Bank of Montreal and Canadian National go up and down completely randomly.
Pair Corralation between Bank of Montreal and Canadian National
Assuming the 90 days trading horizon Bank of Montreal is expected to generate 0.3 times more return on investment than Canadian National. However, Bank of Montreal is 3.28 times less risky than Canadian National. It trades about -0.01 of its potential returns per unit of risk. Canadian National Railway is currently generating about -0.05 per unit of risk. If you would invest 2,617 in Bank of Montreal on August 24, 2024 and sell it today you would lose (2.00) from holding Bank of Montreal or give up 0.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Montreal vs. Canadian National Railway
Performance |
| Timeline |
| Bank of Montreal |
| Canadian National Railway |
Bank of Montreal and Canadian National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Montreal and Canadian National
The main advantage of trading using opposite Bank of Montreal and Canadian National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Montreal position performs unexpectedly, Canadian National 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 Canadian National will offset losses from the drop in Canadian National's long position.| Bank of Montreal vs. DIRTT Environmental Solutions | Bank of Montreal vs. Rubicon Organics | Bank of Montreal vs. HOME DEPOT CDR | Bank of Montreal vs. Quipt Home Medical |
| Canadian National vs. Canadian Pacific Railway | Canadian National vs. Fortis Inc | Canadian National vs. BCE Inc | Canadian National vs. Telus Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |