Correlation Between BMO MSCI and First Asset
Can any of the company-specific risk be diversified away by investing in both BMO MSCI and First Asset 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 BMO MSCI and First Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO MSCI USA and First Asset Energy, you can compare the effects of market volatilities on BMO MSCI and First Asset 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 BMO MSCI with a short position of First Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO MSCI and First Asset.
Diversification Opportunities for BMO MSCI and First Asset
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between BMO and First is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding BMO MSCI USA and First Asset Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Asset Energy and BMO 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 BMO MSCI USA are associated (or correlated) with First Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Asset Energy has no effect on the direction of BMO MSCI i.e., BMO MSCI and First Asset go up and down completely randomly.
Pair Corralation between BMO MSCI and First Asset
Assuming the 90 days trading horizon BMO MSCI USA is expected to generate 1.01 times more return on investment than First Asset. However, BMO MSCI is 1.01 times more volatile than First Asset Energy. It trades about 0.33 of its potential returns per unit of risk. First Asset Energy is currently generating about -0.02 per unit of risk. If you would invest 5,625 in BMO MSCI USA on September 5, 2024 and sell it today you would earn a total of 392.00 from holding BMO MSCI USA or generate 6.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO MSCI USA vs. First Asset Energy
Performance |
| Timeline |
| BMO MSCI USA |
| First Asset Energy |
BMO MSCI and First Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO MSCI and First Asset
The main advantage of trading using opposite BMO MSCI and First Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO MSCI position performs unexpectedly, First Asset 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 First Asset will offset losses from the drop in First Asset's long position.| BMO MSCI vs. First Asset Energy | BMO MSCI vs. First Asset Tech | BMO MSCI vs. Harvest Equal Weight | BMO MSCI vs. CI Canada Lifeco |
| First Asset vs. CI Gold Giants | First Asset vs. First Asset Tech | First Asset vs. CI Canada Lifeco | First Asset vs. Harvest Healthcare Leaders |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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