Correlation Between CI Canadian and BMO High
Can any of the company-specific risk be diversified away by investing in both CI Canadian and BMO High 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 CI Canadian and BMO High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Canadian Convertible and BMO High Yield, you can compare the effects of market volatilities on CI Canadian and BMO High 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 CI Canadian with a short position of BMO High. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Canadian and BMO High.
Diversification Opportunities for CI Canadian and BMO High
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CXF and BMO is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CI Canadian Convertible and BMO High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO High Yield and CI Canadian 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 CI Canadian Convertible are associated (or correlated) with BMO High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO High Yield has no effect on the direction of CI Canadian i.e., CI Canadian and BMO High go up and down completely randomly.
Pair Corralation between CI Canadian and BMO High
Assuming the 90 days trading horizon CI Canadian is expected to generate 4.06 times less return on investment than BMO High. In addition to that, CI Canadian is 4.34 times more volatile than BMO High Yield. It trades about 0.0 of its total potential returns per unit of risk. BMO High Yield is currently generating about 0.09 per unit of volatility. If you would invest 1,129 in BMO High Yield on September 12, 2024 and sell it today you would earn a total of 5.00 from holding BMO High Yield or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CI Canadian Convertible vs. BMO High Yield
Performance |
| Timeline |
| CI Canadian Convertible |
| BMO High Yield |
CI Canadian and BMO High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Canadian and BMO High
The main advantage of trading using opposite CI Canadian and BMO High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Canadian position performs unexpectedly, BMO High 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 High will offset losses from the drop in BMO High's long position.| CI Canadian vs. iShares Core Canadian | CI Canadian vs. BMO Mid Corporate | CI Canadian vs. Global X Active | CI Canadian vs. iShares 1 10Yr Laddered |
| BMO High vs. Purpose Premium Yield | BMO High vs. Purpose Monthly Income | BMO High vs. Purpose International Dividend | BMO High vs. Purpose Enhanced Dividend |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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