Correlation Between Bank of Montreal and UBS Group
Can any of the company-specific risk be diversified away by investing in both Bank of Montreal and UBS Group 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 UBS Group 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 UBS Group AG, you can compare the effects of market volatilities on Bank of Montreal and UBS Group 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 UBS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Montreal and UBS Group.
Diversification Opportunities for Bank of Montreal and UBS Group
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and UBS is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Montreal and UBS Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Group AG 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 UBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Group AG has no effect on the direction of Bank of Montreal i.e., Bank of Montreal and UBS Group go up and down completely randomly.
Pair Corralation between Bank of Montreal and UBS Group
Considering the 90-day investment horizon Bank of Montreal is expected to generate 0.53 times more return on investment than UBS Group. However, Bank of Montreal is 1.9 times less risky than UBS Group. It trades about 0.19 of its potential returns per unit of risk. UBS Group AG is currently generating about 0.01 per unit of risk. If you would invest 9,189 in Bank of Montreal on August 31, 2024 and sell it today you would earn a total of 307.00 from holding Bank of Montreal or generate 3.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Montreal vs. UBS Group AG
Performance |
| Timeline |
| Bank of Montreal |
| UBS Group AG |
Bank of Montreal and UBS Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Montreal and UBS Group
The main advantage of trading using opposite Bank of Montreal and UBS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Montreal position performs unexpectedly, UBS Group 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 UBS Group will offset losses from the drop in UBS Group's long position.| Bank of Montreal vs. RLJ Lodging Trust | Bank of Montreal vs. Aquagold International | Bank of Montreal vs. Stepstone Group | Bank of Montreal vs. Morningstar Unconstrained Allocation |
| UBS Group vs. Citigroup | UBS Group vs. Barclays PLC ADR | UBS Group vs. HSBC Holdings PLC | UBS Group vs. Nu Holdings |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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