Correlation Between Bank of Montreal and Power Financial
Can any of the company-specific risk be diversified away by investing in both Bank of Montreal and Power Financial 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 Power Financial 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 Power Financial 51, you can compare the effects of market volatilities on Bank of Montreal and Power Financial 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 Power Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Montreal and Power Financial.
Diversification Opportunities for Bank of Montreal and Power Financial
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Power is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Montreal and Power Financial 51 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Financial 51 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 Power Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Financial 51 has no effect on the direction of Bank of Montreal i.e., Bank of Montreal and Power Financial go up and down completely randomly.
Pair Corralation between Bank of Montreal and Power Financial
Assuming the 90 days trading horizon Bank of Montreal is expected to generate 0.54 times more return on investment than Power Financial. However, Bank of Montreal is 1.84 times less risky than Power Financial. It trades about 0.01 of its potential returns per unit of risk. Power Financial 51 is currently generating about -0.15 per unit of risk. If you would invest 2,612 in Bank of Montreal on August 29, 2024 and sell it today you would earn a total of 2.00 from holding Bank of Montreal or generate 0.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Montreal vs. Power Financial 51
Performance |
| Timeline |
| Bank of Montreal |
| Power Financial 51 |
Bank of Montreal and Power Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Montreal and Power Financial
The main advantage of trading using opposite Bank of Montreal and Power Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Montreal position performs unexpectedly, Power Financial 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 Power Financial will offset losses from the drop in Power Financial's long position.| Bank of Montreal vs. Walmart Inc CDR | Bank of Montreal vs. Amazon CDR | Bank of Montreal vs. Berkshire Hathaway CDR | Bank of Montreal vs. UnitedHealth Group CDR |
| Power Financial vs. Ramp Metals | Power Financial vs. High Liner Foods | Power Financial vs. Cogeco Communications | Power Financial vs. T2 Metals 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |