Correlation Between Bank of Montreal and Labrador Iron
Can any of the company-specific risk be diversified away by investing in both Bank of Montreal and Labrador Iron 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 Labrador Iron 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 Labrador Iron Ore, you can compare the effects of market volatilities on Bank of Montreal and Labrador Iron 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 Labrador Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Montreal and Labrador Iron.
Diversification Opportunities for Bank of Montreal and Labrador Iron
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Labrador is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Montreal and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore 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 Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of Bank of Montreal i.e., Bank of Montreal and Labrador Iron go up and down completely randomly.
Pair Corralation between Bank of Montreal and Labrador Iron
Assuming the 90 days trading horizon Bank of Montreal is expected to generate 0.63 times more return on investment than Labrador Iron. However, Bank of Montreal is 1.59 times less risky than Labrador Iron. It trades about 0.09 of its potential returns per unit of risk. Labrador Iron Ore is currently generating about -0.01 per unit of risk. If you would invest 1,701 in Bank of Montreal on September 3, 2024 and sell it today you would earn a total of 798.00 from holding Bank of Montreal or generate 46.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.16% |
| Values | Daily Returns |
Bank of Montreal vs. Labrador Iron Ore
Performance |
| Timeline |
| Bank of Montreal |
| Labrador Iron Ore |
Bank of Montreal and Labrador Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Montreal and Labrador Iron
The main advantage of trading using opposite Bank of Montreal and Labrador Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Montreal position performs unexpectedly, Labrador Iron 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 Labrador Iron will offset losses from the drop in Labrador Iron's long position.| Bank of Montreal vs. Atrium Mortgage Investment | Bank of Montreal vs. Canadian General Investments | Bank of Montreal vs. Bip Investment Corp | Bank of Montreal vs. TGS Esports |
| Labrador Iron vs. Keyera Corp | Labrador Iron vs. Russel Metals | Labrador Iron vs. Freehold Royalties | Labrador Iron vs. Capital Power |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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