Correlation Between CI Investment and BMO Mid
Can any of the company-specific risk be diversified away by investing in both CI Investment and BMO Mid 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 CI Investment and BMO Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Investment Grade and BMO Mid Term IG, you can compare the effects of market volatilities on CI Investment and BMO Mid 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 CI Investment with a short position of BMO Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Investment and BMO Mid.
Diversification Opportunities for CI Investment and BMO Mid
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FIG and BMO is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CI Investment Grade and BMO Mid Term IG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Mid Term and CI Investment 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 CI Investment Grade are associated (or correlated) with BMO Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Mid Term has no effect on the direction of CI Investment i.e., CI Investment and BMO Mid go up and down completely randomly.
Pair Corralation between CI Investment and BMO Mid
Assuming the 90 days trading horizon CI Investment is expected to generate 1.42 times less return on investment than BMO Mid. But when comparing it to its historical volatility, CI Investment Grade is 1.32 times less risky than BMO Mid. It trades about 0.07 of its potential returns per unit of risk. BMO Mid Term IG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,577 in BMO Mid Term IG on September 13, 2024 and sell it today you would earn a total of 278.00 from holding BMO Mid Term IG or generate 17.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
CI Investment Grade vs. BMO Mid Term IG
Performance |
| Timeline |
| CI Investment Grade |
| BMO Mid Term |
CI Investment and BMO Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Investment and BMO Mid
The main advantage of trading using opposite CI Investment and BMO Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Investment position performs unexpectedly, BMO Mid 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 Mid will offset losses from the drop in BMO Mid's long position.| CI Investment vs. CI Enhanced Short | CI Investment vs. Global X Active | CI Investment vs. Mackenzie Unconstrained Bond | CI Investment vs. CI Enhanced Government |
| BMO Mid vs. BMO Mid Term IG | BMO Mid vs. BMO Mid Corporate | BMO Mid vs. CI Canadian Banks | BMO Mid vs. BMO Long Corporate |
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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