Correlation Between IShares MSCI and BMO Long
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and BMO Long 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 MSCI and BMO Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Emerging and BMO Long Corporate, you can compare the effects of market volatilities on IShares MSCI and BMO Long 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 MSCI with a short position of BMO Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and BMO Long.
Diversification Opportunities for IShares MSCI and BMO Long
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and BMO is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Emerging and BMO Long Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Long Corporate and IShares MSCI 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 MSCI Emerging are associated (or correlated) with BMO Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Long Corporate has no effect on the direction of IShares MSCI i.e., IShares MSCI and BMO Long go up and down completely randomly.
Pair Corralation between IShares MSCI and BMO Long
Given the investment horizon of 90 days iShares MSCI Emerging is expected to generate 0.79 times more return on investment than BMO Long. However, iShares MSCI Emerging is 1.26 times less risky than BMO Long. It trades about 0.05 of its potential returns per unit of risk. BMO Long Corporate is currently generating about 0.04 per unit of risk. If you would invest 5,239 in iShares MSCI Emerging on September 3, 2024 and sell it today you would earn a total of 752.00 from holding iShares MSCI Emerging or generate 14.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
iShares MSCI Emerging vs. BMO Long Corporate
Performance |
| Timeline |
| iShares MSCI Emerging |
| BMO Long Corporate |
IShares MSCI and BMO Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and BMO Long
The main advantage of trading using opposite IShares MSCI and BMO Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, BMO Long 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 Long will offset losses from the drop in BMO Long's long position.| IShares MSCI vs. iShares MSCI Global | IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. BMO Long Federal | IShares MSCI vs. iShares MSCI USA |
| BMO Long vs. BMO Mid Corporate | BMO Long vs. BMO Short Corporate | BMO Long vs. BMO High Yield | BMO Long vs. BMO Emerging Markets |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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