Correlation Between Dynamic Active and BMO Global
Can any of the company-specific risk be diversified away by investing in both Dynamic Active and BMO Global 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 Dynamic Active and BMO Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynamic Active Global and BMO Global High, you can compare the effects of market volatilities on Dynamic Active and BMO Global 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 Dynamic Active with a short position of BMO Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynamic Active and BMO Global.
Diversification Opportunities for Dynamic Active and BMO Global
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dynamic and BMO is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Active Global and BMO Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Global High and Dynamic Active 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 Dynamic Active Global are associated (or correlated) with BMO Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Global High has no effect on the direction of Dynamic Active i.e., Dynamic Active and BMO Global go up and down completely randomly.
Pair Corralation between Dynamic Active and BMO Global
Assuming the 90 days trading horizon Dynamic Active is expected to generate 1.06 times less return on investment than BMO Global. In addition to that, Dynamic Active is 1.29 times more volatile than BMO Global High. It trades about 0.03 of its total potential returns per unit of risk. BMO Global High is currently generating about 0.04 per unit of volatility. If you would invest 3,335 in BMO Global High on November 28, 2024 and sell it today you would earn a total of 13.00 from holding BMO Global High or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynamic Active Global vs. BMO Global High
Performance |
| Timeline |
| Dynamic Active Global |
| BMO Global High |
Dynamic Active and BMO Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynamic Active and BMO Global
The main advantage of trading using opposite Dynamic Active and BMO Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynamic Active position performs unexpectedly, BMO Global 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 Global will offset losses from the drop in BMO Global's long position.| Dynamic Active vs. Dynamic Active Canadian | Dynamic Active vs. Dynamic Active Dividend | Dynamic Active vs. Dynamic Active Global | Dynamic Active vs. Dynamic Active Mid Cap |
| BMO Global vs. BMO Short Term Bond | BMO Global vs. BMO Canadian Bank | BMO Global vs. BMO Aggregate Bond | BMO Global vs. BMO Balanced ETF |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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