Correlation Between Fidelity International and BMO SP
Can any of the company-specific risk be diversified away by investing in both Fidelity International and BMO SP 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 Fidelity International and BMO SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity International High and BMO SP 500, you can compare the effects of market volatilities on Fidelity International and BMO SP 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 Fidelity International with a short position of BMO SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity International and BMO SP.
Diversification Opportunities for Fidelity International and BMO SP
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fidelity and BMO is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International High and BMO SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO SP 500 and Fidelity International 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 Fidelity International High are associated (or correlated) with BMO SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO SP 500 has no effect on the direction of Fidelity International i.e., Fidelity International and BMO SP go up and down completely randomly.
Pair Corralation between Fidelity International and BMO SP
Assuming the 90 days trading horizon Fidelity International is expected to generate 2.44 times less return on investment than BMO SP. In addition to that, Fidelity International is 1.01 times more volatile than BMO SP 500. It trades about 0.05 of its total potential returns per unit of risk. BMO SP 500 is currently generating about 0.12 per unit of volatility. If you would invest 7,012 in BMO SP 500 on September 1, 2024 and sell it today you would earn a total of 1,335 from holding BMO SP 500 or generate 19.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity International High vs. BMO SP 500
Performance |
| Timeline |
| Fidelity International |
| BMO SP 500 |
Fidelity International and BMO SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity International and BMO SP
The main advantage of trading using opposite Fidelity International and BMO SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity International position performs unexpectedly, BMO SP 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 SP will offset losses from the drop in BMO SP's long position.| Fidelity International vs. Fidelity High Quality | Fidelity International vs. Dynamic Active Preferred | Fidelity International vs. Dynamic Active Global | Fidelity International vs. Mackenzie Floating Rate |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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