Correlation Between Bitcoin ETF and BMO Equal
Can any of the company-specific risk be diversified away by investing in both Bitcoin ETF 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 Bitcoin ETF and BMO Equal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin ETF CAD and BMO Equal Weight, you can compare the effects of market volatilities on Bitcoin ETF 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 Bitcoin ETF with a short position of BMO Equal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin ETF and BMO Equal.
Diversification Opportunities for Bitcoin ETF and BMO Equal
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bitcoin and BMO is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin ETF CAD 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 Bitcoin ETF 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 Bitcoin ETF CAD 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 Bitcoin ETF i.e., Bitcoin ETF and BMO Equal go up and down completely randomly.
Pair Corralation between Bitcoin ETF and BMO Equal
Assuming the 90 days trading horizon Bitcoin ETF CAD is expected to generate 5.62 times more return on investment than BMO Equal. However, Bitcoin ETF is 5.62 times more volatile than BMO Equal Weight. It trades about 0.36 of its potential returns per unit of risk. BMO Equal Weight is currently generating about -0.24 per unit of risk. If you would invest 3,457 in Bitcoin ETF CAD on August 28, 2024 and sell it today you would earn a total of 1,289 from holding Bitcoin ETF CAD or generate 37.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin ETF CAD vs. BMO Equal Weight
Performance |
| Timeline |
| Bitcoin ETF CAD |
| BMO Equal Weight |
Bitcoin ETF and BMO Equal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin ETF and BMO Equal
The main advantage of trading using opposite Bitcoin ETF and BMO Equal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin ETF 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.| Bitcoin ETF vs. Bitcoin ETF | Bitcoin ETF vs. NBI High Yield | Bitcoin ETF vs. NBI Unconstrained Fixed | Bitcoin ETF vs. Mackenzie Developed ex North |
| BMO Equal vs. iShares SPTSX Capped | BMO Equal vs. iShares Canadian Select | BMO Equal vs. iShares SPTSX Capped | BMO Equal vs. iShares Diversified Monthly |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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