Correlation Between Global X and BMO Dividend
Can any of the company-specific risk be diversified away by investing in both Global X and BMO Dividend 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 Global X and BMO Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Seasonal and BMO Dividend CAD, you can compare the effects of market volatilities on Global X and BMO Dividend 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 Global X with a short position of BMO Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and BMO Dividend.
Diversification Opportunities for Global X and BMO Dividend
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and BMO is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Global X Seasonal and BMO Dividend CAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Dividend CAD and Global X 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 Global X Seasonal are associated (or correlated) with BMO Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Dividend CAD has no effect on the direction of Global X i.e., Global X and BMO Dividend go up and down completely randomly.
Pair Corralation between Global X and BMO Dividend
Assuming the 90 days trading horizon Global X Seasonal is expected to generate 1.14 times more return on investment than BMO Dividend. However, Global X is 1.14 times more volatile than BMO Dividend CAD. It trades about 0.13 of its potential returns per unit of risk. BMO Dividend CAD is currently generating about 0.15 per unit of risk. If you would invest 3,119 in Global X Seasonal on August 26, 2024 and sell it today you would earn a total of 79.00 from holding Global X Seasonal or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Seasonal vs. BMO Dividend CAD
Performance |
| Timeline |
| Global X Seasonal |
| BMO Dividend CAD |
Global X and BMO Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and BMO Dividend
The main advantage of trading using opposite Global X and BMO Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, BMO Dividend 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 Dividend will offset losses from the drop in BMO Dividend's long position.| Global X vs. Global X Active | Global X vs. Global X Active | Global X vs. Global X Active | Global X vs. Global X Active |
| BMO Dividend vs. BMO Europe High | BMO Dividend vs. BMO Covered Call | BMO Dividend vs. BMO Covered Call | BMO Dividend vs. BMO Europe 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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