Correlation Between Fidelity High and BMO High
Can any of the company-specific risk be diversified away by investing in both Fidelity High and BMO High 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 High and BMO High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity High Dividend and BMO High Dividend, you can compare the effects of market volatilities on Fidelity High and BMO High 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 High with a short position of BMO High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity High and BMO High.
Diversification Opportunities for Fidelity High and BMO High
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and BMO is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity High Dividend and BMO High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO High Dividend and Fidelity High 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 High Dividend are associated (or correlated) with BMO High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO High Dividend has no effect on the direction of Fidelity High i.e., Fidelity High and BMO High go up and down completely randomly.
Pair Corralation between Fidelity High and BMO High
Assuming the 90 days trading horizon Fidelity High Dividend is expected to generate 0.95 times more return on investment than BMO High. However, Fidelity High Dividend is 1.06 times less risky than BMO High. It trades about 0.16 of its potential returns per unit of risk. BMO High Dividend is currently generating about 0.08 per unit of risk. If you would invest 3,765 in Fidelity High Dividend on November 9, 2024 and sell it today you would earn a total of 96.00 from holding Fidelity High Dividend or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity High Dividend vs. BMO High Dividend
Performance |
| Timeline |
| Fidelity High Dividend |
| BMO High Dividend |
Fidelity High and BMO High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity High and BMO High
The main advantage of trading using opposite Fidelity High and BMO High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity High position performs unexpectedly, BMO High 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 High will offset losses from the drop in BMO High's long position.| Fidelity High vs. Fidelity Canadian High | Fidelity High vs. Fidelity International High | Fidelity High vs. Fidelity High Dividend | Fidelity High vs. Fidelity Dividend for |
| BMO High vs. BMO Europe High | BMO High vs. BMO Covered Call | BMO High vs. BMO Covered Call | BMO High vs. BMO Europe High |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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