Correlation Between Bank of Montreal and Ascot Resources
Can any of the company-specific risk be diversified away by investing in both Bank of Montreal and Ascot Resources 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 Ascot Resources 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 Ascot Resources, you can compare the effects of market volatilities on Bank of Montreal and Ascot Resources 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 Ascot Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Montreal and Ascot Resources.
Diversification Opportunities for Bank of Montreal and Ascot Resources
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Ascot is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Montreal and Ascot Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascot Resources 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 Ascot Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascot Resources has no effect on the direction of Bank of Montreal i.e., Bank of Montreal and Ascot Resources go up and down completely randomly.
Pair Corralation between Bank of Montreal and Ascot Resources
Assuming the 90 days trading horizon Bank of Montreal is expected to generate 7.41 times less return on investment than Ascot Resources. But when comparing it to its historical volatility, Bank of Montreal is 5.85 times less risky than Ascot Resources. It trades about 0.24 of its potential returns per unit of risk. Ascot Resources is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Ascot Resources on October 21, 2024 and sell it today you would earn a total of 4.00 from holding Ascot Resources or generate 25.0% 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. Ascot Resources
Performance |
| Timeline |
| Bank of Montreal |
| Ascot Resources |
Bank of Montreal and Ascot Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Montreal and Ascot Resources
The main advantage of trading using opposite Bank of Montreal and Ascot Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Montreal position performs unexpectedly, Ascot Resources 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 Ascot Resources will offset losses from the drop in Ascot Resources' long position.| Bank of Montreal vs. Royal Bank of | Bank of Montreal vs. Canadian Imperial Bank | Bank of Montreal vs. Bank of Nova | Bank of Montreal vs. Toronto Dominion Bank |
| Ascot Resources vs. Algoma Steel Group | Ascot Resources vs. BluMetric Environmental | Ascot Resources vs. Rogers Communications | Ascot Resources vs. Champion Iron |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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