Correlation Between Forstrong Global and BMO Europe
Can any of the company-specific risk be diversified away by investing in both Forstrong Global and BMO Europe 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 Forstrong Global and BMO Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forstrong Global Income and BMO Europe High, you can compare the effects of market volatilities on Forstrong Global and BMO Europe 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 Forstrong Global with a short position of BMO Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forstrong Global and BMO Europe.
Diversification Opportunities for Forstrong Global and BMO Europe
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Forstrong and BMO is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Income and BMO Europe High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Europe High and Forstrong Global 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 Forstrong Global Income are associated (or correlated) with BMO Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Europe High has no effect on the direction of Forstrong Global i.e., Forstrong Global and BMO Europe go up and down completely randomly.
Pair Corralation between Forstrong Global and BMO Europe
Assuming the 90 days trading horizon Forstrong Global Income is expected to generate 0.46 times more return on investment than BMO Europe. However, Forstrong Global Income is 2.16 times less risky than BMO Europe. It trades about -0.08 of its potential returns per unit of risk. BMO Europe High is currently generating about -0.17 per unit of risk. If you would invest 2,175 in Forstrong Global Income on September 1, 2024 and sell it today you would lose (13.00) from holding Forstrong Global Income or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Forstrong Global Income vs. BMO Europe High
Performance |
| Timeline |
| Forstrong Global Income |
| BMO Europe High |
Forstrong Global and BMO Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forstrong Global and BMO Europe
The main advantage of trading using opposite Forstrong Global and BMO Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forstrong Global position performs unexpectedly, BMO Europe 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 Europe will offset losses from the drop in BMO Europe's long position.| Forstrong Global vs. iShares SPTSX 60 | Forstrong Global vs. iShares Core SP | Forstrong Global vs. iShares Core SPTSX | Forstrong Global vs. BMO Aggregate Bond |
| BMO Europe vs. BMO Europe High | BMO Europe vs. BMO High Dividend | BMO Europe vs. BMO Covered Call | BMO Europe vs. BMO Global 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |