Correlation Between Blockchain Technologies and BMO Emerging
Can any of the company-specific risk be diversified away by investing in both Blockchain Technologies and BMO Emerging 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 Blockchain Technologies and BMO Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blockchain Technologies ETF and BMO Emerging Markets, you can compare the effects of market volatilities on Blockchain Technologies and BMO Emerging 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 Blockchain Technologies with a short position of BMO Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blockchain Technologies and BMO Emerging.
Diversification Opportunities for Blockchain Technologies and BMO Emerging
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Blockchain and BMO is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Blockchain Technologies ETF and BMO Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Emerging Markets and Blockchain Technologies 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 Blockchain Technologies ETF are associated (or correlated) with BMO Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Emerging Markets has no effect on the direction of Blockchain Technologies i.e., Blockchain Technologies and BMO Emerging go up and down completely randomly.
Pair Corralation between Blockchain Technologies and BMO Emerging
Assuming the 90 days trading horizon Blockchain Technologies ETF is expected to generate 11.82 times more return on investment than BMO Emerging. However, Blockchain Technologies is 11.82 times more volatile than BMO Emerging Markets. It trades about 0.21 of its potential returns per unit of risk. BMO Emerging Markets is currently generating about -0.06 per unit of risk. If you would invest 1,709 in Blockchain Technologies ETF on August 25, 2024 and sell it today you would earn a total of 371.00 from holding Blockchain Technologies ETF or generate 21.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blockchain Technologies ETF vs. BMO Emerging Markets
Performance |
| Timeline |
| Blockchain Technologies |
| BMO Emerging Markets |
Blockchain Technologies and BMO Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blockchain Technologies and BMO Emerging
The main advantage of trading using opposite Blockchain Technologies and BMO Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blockchain Technologies position performs unexpectedly, BMO Emerging 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 Emerging will offset losses from the drop in BMO Emerging's long position.| Blockchain Technologies vs. BMO Equal Weight | Blockchain Technologies vs. BMO SPTSX Equal | Blockchain Technologies vs. BMO Equal Weight |
| BMO Emerging vs. iShares IG Corporate | BMO Emerging vs. iShares 1 10Yr Laddered | BMO Emerging vs. iShares Floating Rate | BMO Emerging vs. iShares Convertible Bond |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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