Correlation Between IShares Dividend and BMO Europe
Can any of the company-specific risk be diversified away by investing in both IShares Dividend and BMO Europe 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 IShares Dividend and BMO Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Dividend Growers and BMO Europe High, you can compare the effects of market volatilities on IShares Dividend and BMO Europe 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 IShares Dividend with a short position of BMO Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Dividend and BMO Europe.
Diversification Opportunities for IShares Dividend and BMO Europe
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and BMO is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding iShares Dividend Growers and BMO Europe High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Europe High and IShares Dividend 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 iShares Dividend Growers are associated (or correlated) with BMO Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Europe High has no effect on the direction of IShares Dividend i.e., IShares Dividend and BMO Europe go up and down completely randomly.
Pair Corralation between IShares Dividend and BMO Europe
Assuming the 90 days trading horizon iShares Dividend Growers is expected to generate 0.91 times more return on investment than BMO Europe. However, iShares Dividend Growers is 1.1 times less risky than BMO Europe. It trades about 0.05 of its potential returns per unit of risk. BMO Europe High is currently generating about -0.16 per unit of risk. If you would invest 5,606 in iShares Dividend Growers on August 25, 2024 and sell it today you would earn a total of 37.00 from holding iShares Dividend Growers or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Dividend Growers vs. BMO Europe High
Performance |
| Timeline |
| iShares Dividend Growers |
| BMO Europe High |
IShares Dividend and BMO Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Dividend and BMO Europe
The main advantage of trading using opposite IShares Dividend and BMO Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Dividend position performs unexpectedly, BMO Europe 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 Europe will offset losses from the drop in BMO Europe's long position.| IShares Dividend vs. BMO Europe High | IShares Dividend vs. BMO Covered Call | IShares Dividend vs. BMO Covered Call | IShares Dividend vs. BMO Europe High |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |