Correlation Between Falcon Energy and Bank of Montreal
Can any of the company-specific risk be diversified away by investing in both Falcon Energy and Bank of Montreal 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 Falcon Energy and Bank of Montreal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Energy Materials and Bank of Montreal, you can compare the effects of market volatilities on Falcon Energy and Bank of Montreal 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 Falcon Energy with a short position of Bank of Montreal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Energy and Bank of Montreal.
Diversification Opportunities for Falcon Energy and Bank of Montreal
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Falcon and Bank is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and Bank of Montreal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Montreal and Falcon Energy 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 Falcon Energy Materials are associated (or correlated) with Bank of Montreal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Montreal has no effect on the direction of Falcon Energy i.e., Falcon Energy and Bank of Montreal go up and down completely randomly.
Pair Corralation between Falcon Energy and Bank of Montreal
Assuming the 90 days trading horizon Falcon Energy Materials is expected to under-perform the Bank of Montreal. In addition to that, Falcon Energy is 10.73 times more volatile than Bank of Montreal. It trades about -0.25 of its total potential returns per unit of risk. Bank of Montreal is currently generating about 0.06 per unit of volatility. If you would invest 2,620 in Bank of Montreal on September 13, 2024 and sell it today you would earn a total of 9.00 from holding Bank of Montreal or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Falcon Energy Materials vs. Bank of Montreal
Performance |
| Timeline |
| Falcon Energy Materials |
| Bank of Montreal |
Falcon Energy and Bank of Montreal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Energy and Bank of Montreal
The main advantage of trading using opposite Falcon Energy and Bank of Montreal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Energy position performs unexpectedly, Bank of Montreal 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 Bank of Montreal will offset losses from the drop in Bank of Montreal's long position.| Falcon Energy vs. Income Financial Trust | Falcon Energy vs. First National Financial | Falcon Energy vs. Nicola Mining | Falcon Energy vs. Aya Gold Silver |
| Bank of Montreal vs. Diversified Royalty Corp | Bank of Montreal vs. Falcon Energy Materials | Bank of Montreal vs. Element Fleet Management | Bank of Montreal vs. Economic Investment Trust |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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