Correlation Between Global X and BMO Long
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and BMO Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Canadian and BMO Long Federal, you can compare the effects of market volatilities on Global X 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 Global X with a short position of BMO Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and BMO Long.
Diversification Opportunities for Global X and BMO Long
Pay attention - limited upside
The 3 months correlation between Global and BMO is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Global X Canadian and BMO Long Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Long Federal and Global X 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 Global X Canadian 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 Federal has no effect on the direction of Global X i.e., Global X and BMO Long go up and down completely randomly.
Pair Corralation between Global X and BMO Long
Assuming the 90 days trading horizon Global X Canadian is expected to generate 1.03 times more return on investment than BMO Long. However, Global X is 1.03 times more volatile than BMO Long Federal. It trades about 0.06 of its potential returns per unit of risk. BMO Long Federal is currently generating about 0.0 per unit of risk. If you would invest 891.00 in Global X Canadian on August 28, 2024 and sell it today you would earn a total of 266.00 from holding Global X Canadian or generate 29.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Canadian vs. BMO Long Federal
Performance |
| Timeline |
| Global X Canadian |
| BMO Long Federal |
Global X and BMO Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and BMO Long
The main advantage of trading using opposite Global X and BMO Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.| Global X vs. iShares SPTSX Capped | Global X vs. iShares SPTSX Global | Global X vs. iShares SPTSX 60 | Global X vs. iShares SPTSX Capped |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |