Correlation Between Harvest Clean and BMO Clean
Can any of the company-specific risk be diversified away by investing in both Harvest Clean and BMO Clean 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 Harvest Clean and BMO Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harvest Clean Energy and BMO Clean Energy, you can compare the effects of market volatilities on Harvest Clean and BMO Clean 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 Harvest Clean with a short position of BMO Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harvest Clean and BMO Clean.
Diversification Opportunities for Harvest Clean and BMO Clean
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Harvest and BMO is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Clean Energy and BMO Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Clean Energy and Harvest Clean 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 Harvest Clean Energy are associated (or correlated) with BMO Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Clean Energy has no effect on the direction of Harvest Clean i.e., Harvest Clean and BMO Clean go up and down completely randomly.
Pair Corralation between Harvest Clean and BMO Clean
Assuming the 90 days trading horizon Harvest Clean Energy is expected to under-perform the BMO Clean. In addition to that, Harvest Clean is 1.04 times more volatile than BMO Clean Energy. It trades about -0.06 of its total potential returns per unit of risk. BMO Clean Energy is currently generating about -0.06 per unit of volatility. If you would invest 1,905 in BMO Clean Energy on August 31, 2024 and sell it today you would lose (563.00) from holding BMO Clean Energy or give up 29.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harvest Clean Energy vs. BMO Clean Energy
Performance |
| Timeline |
| Harvest Clean Energy |
| BMO Clean Energy |
Harvest Clean and BMO Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harvest Clean and BMO Clean
The main advantage of trading using opposite Harvest Clean and BMO Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harvest Clean position performs unexpectedly, BMO Clean 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 Clean will offset losses from the drop in BMO Clean's long position.| Harvest Clean vs. Forstrong Global Income | Harvest Clean vs. BMO Aggregate Bond | Harvest Clean vs. iShares Canadian HYBrid | Harvest Clean vs. Brompton European Dividend |
| BMO Clean vs. BMO Short Term Bond | BMO Clean vs. BMO Canadian Bank | BMO Clean vs. BMO Aggregate Bond | BMO Clean vs. BMO Balanced ETF |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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