Correlation Between GM and BMO Conservative
Can any of the company-specific risk be diversified away by investing in both GM and BMO Conservative 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 GM and BMO Conservative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and BMO Conservative ETF, you can compare the effects of market volatilities on GM and BMO Conservative 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 GM with a short position of BMO Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and BMO Conservative.
Diversification Opportunities for GM and BMO Conservative
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and BMO is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and BMO Conservative ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Conservative ETF and GM 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 General Motors are associated (or correlated) with BMO Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Conservative ETF has no effect on the direction of GM i.e., GM and BMO Conservative go up and down completely randomly.
Pair Corralation between GM and BMO Conservative
Allowing for the 90-day total investment horizon General Motors is expected to generate 7.8 times more return on investment than BMO Conservative. However, GM is 7.8 times more volatile than BMO Conservative ETF. It trades about 0.17 of its potential returns per unit of risk. BMO Conservative ETF is currently generating about 0.31 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. BMO Conservative ETF
Performance |
| Timeline |
| General Motors |
| BMO Conservative ETF |
GM and BMO Conservative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and BMO Conservative
The main advantage of trading using opposite GM and BMO Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, BMO Conservative 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 Conservative will offset losses from the drop in BMO Conservative's long position.The idea behind General Motors and BMO Conservative ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BMO Conservative vs. Vanguard Conservative ETF | BMO Conservative vs. Vanguard Balanced Portfolio | BMO Conservative vs. iShares Core Income | BMO Conservative vs. iShares Core Balanced |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Stocks Directory Find actively traded stocks across global markets |