Correlation Between GLOBAL X and BMO Low
Can any of the company-specific risk be diversified away by investing in both GLOBAL X and BMO Low 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 GLOBAL X and BMO Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GLOBAL X HIGH and BMO Low Volatility, you can compare the effects of market volatilities on GLOBAL X and BMO Low 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 GLOBAL X with a short position of BMO Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLOBAL X and BMO Low.
Diversification Opportunities for GLOBAL X and BMO Low
Excellent diversification
The 3 months correlation between GLOBAL and BMO is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding GLOBAL X HIGH and BMO Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Low Volatility and GLOBAL X 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 GLOBAL X HIGH are associated (or correlated) with BMO Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Low Volatility has no effect on the direction of GLOBAL X i.e., GLOBAL X and BMO Low go up and down completely randomly.
Pair Corralation between GLOBAL X and BMO Low
Assuming the 90 days trading horizon GLOBAL X is expected to generate 1.38 times less return on investment than BMO Low. But when comparing it to its historical volatility, GLOBAL X HIGH is 11.12 times less risky than BMO Low. It trades about 0.33 of its potential returns per unit of risk. BMO Low Volatility is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,098 in BMO Low Volatility on November 2, 2024 and sell it today you would earn a total of 380.00 from holding BMO Low Volatility or generate 12.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
GLOBAL X HIGH vs. BMO Low Volatility
Performance |
| Timeline |
| GLOBAL X HIGH |
| BMO Low Volatility |
GLOBAL X and BMO Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GLOBAL X and BMO Low
The main advantage of trading using opposite GLOBAL X and BMO Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLOBAL X position performs unexpectedly, BMO Low 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 Low will offset losses from the drop in BMO Low's long position.| GLOBAL X vs. Purpose High Interest | GLOBAL X vs. CI High Interest | GLOBAL X vs. Global X Cash | GLOBAL X vs. iShares Core Equity |
| BMO Low vs. BMO Low Volatility | BMO Low vs. BMO Low Volatility | BMO Low vs. BMO Low Volatility | BMO Low vs. BMO Dividend CAD |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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