Correlation Between Global X and BMO Global
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and BMO Global 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 Global Infrastructure, you can compare the effects of market volatilities on Global X 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 Global X with a short position of BMO Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and BMO Global.
Diversification Opportunities for Global X and BMO Global
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and BMO is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Global X Canadian and BMO Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Global Infrastructure 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 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 Infrastructure has no effect on the direction of Global X i.e., Global X and BMO Global go up and down completely randomly.
Pair Corralation between Global X and BMO Global
Assuming the 90 days trading horizon Global X is expected to generate 2.53 times less return on investment than BMO Global. In addition to that, Global X is 1.25 times more volatile than BMO Global Infrastructure. It trades about 0.1 of its total potential returns per unit of risk. BMO Global Infrastructure is currently generating about 0.3 per unit of volatility. If you would invest 5,099 in BMO Global Infrastructure on August 28, 2024 and sell it today you would earn a total of 268.00 from holding BMO Global Infrastructure or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Canadian vs. BMO Global Infrastructure
Performance |
| Timeline |
| Global X Canadian |
| BMO Global Infrastructure |
Global X and BMO Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and BMO Global
The main advantage of trading using opposite Global X and BMO Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.| Global X vs. iShares SPTSX Capped | Global X vs. iShares SPTSX Global | Global X vs. iShares SPTSX 60 | Global X vs. iShares SPTSX Capped |
| BMO Global vs. BMO Equal Weight | BMO Global vs. BMO Low Volatility | BMO Global vs. BMO Equal Weight | BMO Global vs. BMO MSCI Emerging |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |