Correlation Between Accelerate Absolute and BMO Canadian
Can any of the company-specific risk be diversified away by investing in both Accelerate Absolute and BMO Canadian 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 Accelerate Absolute and BMO Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accelerate Absolute Return and BMO Canadian Bank, you can compare the effects of market volatilities on Accelerate Absolute and BMO Canadian 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 Accelerate Absolute with a short position of BMO Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accelerate Absolute and BMO Canadian.
Diversification Opportunities for Accelerate Absolute and BMO Canadian
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Accelerate and BMO is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Accelerate Absolute Return and BMO Canadian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Canadian Bank and Accelerate Absolute 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 Accelerate Absolute Return are associated (or correlated) with BMO Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Canadian Bank has no effect on the direction of Accelerate Absolute i.e., Accelerate Absolute and BMO Canadian go up and down completely randomly.
Pair Corralation between Accelerate Absolute and BMO Canadian
Assuming the 90 days trading horizon Accelerate Absolute Return is expected to generate 12.02 times more return on investment than BMO Canadian. However, Accelerate Absolute is 12.02 times more volatile than BMO Canadian Bank. It trades about 0.16 of its potential returns per unit of risk. BMO Canadian Bank is currently generating about 0.23 per unit of risk. If you would invest 2,697 in Accelerate Absolute Return on September 3, 2024 and sell it today you would earn a total of 126.00 from holding Accelerate Absolute Return or generate 4.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Accelerate Absolute Return vs. BMO Canadian Bank
Performance |
| Timeline |
| Accelerate Absolute |
| BMO Canadian Bank |
Accelerate Absolute and BMO Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Accelerate Absolute and BMO Canadian
The main advantage of trading using opposite Accelerate Absolute and BMO Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accelerate Absolute position performs unexpectedly, BMO Canadian 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 Canadian will offset losses from the drop in BMO Canadian's long position.| Accelerate Absolute vs. Global X Active | Accelerate Absolute vs. Global X Active | Accelerate Absolute vs. Global X Active | Accelerate Absolute vs. Global X Active |
| BMO Canadian vs. BMO Short Term Bond | BMO Canadian vs. BMO Aggregate Bond | BMO Canadian vs. BMO Balanced ETF | BMO Canadian vs. BMO Aggregate 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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