Correlation Between Citigroup and BMO Equal
Can any of the company-specific risk be diversified away by investing in both Citigroup and BMO Equal 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 Citigroup and BMO Equal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and BMO Equal Weight, you can compare the effects of market volatilities on Citigroup and BMO Equal 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 Citigroup with a short position of BMO Equal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and BMO Equal.
Diversification Opportunities for Citigroup and BMO Equal
Almost no diversification
The 3 months correlation between Citigroup and BMO is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BMO Equal Weight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Equal Weight and Citigroup 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 Citigroup are associated (or correlated) with BMO Equal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Equal Weight has no effect on the direction of Citigroup i.e., Citigroup and BMO Equal go up and down completely randomly.
Pair Corralation between Citigroup and BMO Equal
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.17 times less return on investment than BMO Equal. But when comparing it to its historical volatility, Citigroup is 1.33 times less risky than BMO Equal. It trades about 0.26 of its potential returns per unit of risk. BMO Equal Weight is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3,485 in BMO Equal Weight on September 1, 2024 and sell it today you would earn a total of 509.00 from holding BMO Equal Weight or generate 14.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Citigroup vs. BMO Equal Weight
Performance |
| Timeline |
| Citigroup |
| BMO Equal Weight |
Citigroup and BMO Equal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and BMO Equal
The main advantage of trading using opposite Citigroup and BMO Equal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, BMO Equal 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 BMO Equal will offset losses from the drop in BMO Equal's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| BMO Equal vs. BMO Canadian Dividend | BMO Equal vs. BMO Covered Call | BMO Equal vs. BMO Canadian High | BMO Equal vs. BMO NASDAQ 100 |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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