Correlation Between Franklin Bissett and BMO Low
Can any of the company-specific risk be diversified away by investing in both Franklin Bissett and BMO Low 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 Franklin Bissett and BMO Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Bissett Corporate and BMO Low Volatility, you can compare the effects of market volatilities on Franklin Bissett and BMO Low 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 Franklin Bissett with a short position of BMO Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Bissett and BMO Low.
Diversification Opportunities for Franklin Bissett and BMO Low
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and BMO is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Bissett Corporate and BMO Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Low Volatility and Franklin Bissett 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 Franklin Bissett Corporate are associated (or correlated) with BMO Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Low Volatility has no effect on the direction of Franklin Bissett i.e., Franklin Bissett and BMO Low go up and down completely randomly.
Pair Corralation between Franklin Bissett and BMO Low
Assuming the 90 days trading horizon Franklin Bissett Corporate is expected to generate 0.53 times more return on investment than BMO Low. However, Franklin Bissett Corporate is 1.88 times less risky than BMO Low. It trades about 0.18 of its potential returns per unit of risk. BMO Low Volatility is currently generating about -0.1 per unit of risk. If you would invest 1,787 in Franklin Bissett Corporate on September 12, 2024 and sell it today you would earn a total of 39.00 from holding Franklin Bissett Corporate or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Bissett Corporate vs. BMO Low Volatility
Performance |
| Timeline |
| Franklin Bissett Cor |
| BMO Low Volatility |
Franklin Bissett and BMO Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Bissett and BMO Low
The main advantage of trading using opposite Franklin Bissett and BMO Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Bissett position performs unexpectedly, BMO Low 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 Low will offset losses from the drop in BMO Low's long position.| Franklin Bissett vs. Franklin Global Aggregate | Franklin Bissett vs. Franklin Large Cap | Franklin Bissett vs. First Trust Senior |
| BMO Low vs. BMO Low Volatility | BMO Low vs. BMO Low Volatility | BMO Low vs. BMO Low Volatility | BMO Low vs. BMO Dividend CAD |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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