Correlation Between BetaPro SP and BMO Long
Can any of the company-specific risk be diversified away by investing in both BetaPro SP and BMO Long 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 BetaPro SP and BMO Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro SP TSX and BMO Long Federal, you can compare the effects of market volatilities on BetaPro SP and BMO Long 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 BetaPro SP with a short position of BMO Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and BMO Long.
Diversification Opportunities for BetaPro SP and BMO Long
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BetaPro and BMO is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP TSX and BMO Long Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Long Federal and BetaPro SP 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 BetaPro SP TSX are associated (or correlated) with BMO Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Long Federal has no effect on the direction of BetaPro SP i.e., BetaPro SP and BMO Long go up and down completely randomly.
Pair Corralation between BetaPro SP and BMO Long
Assuming the 90 days trading horizon BetaPro SP TSX is expected to generate 3.05 times more return on investment than BMO Long. However, BetaPro SP is 3.05 times more volatile than BMO Long Federal. It trades about 0.03 of its potential returns per unit of risk. BMO Long Federal is currently generating about 0.0 per unit of risk. If you would invest 2,570 in BetaPro SP TSX on August 24, 2024 and sell it today you would earn a total of 548.00 from holding BetaPro SP TSX or generate 21.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro SP TSX vs. BMO Long Federal
Performance |
| Timeline |
| BetaPro SP TSX |
| BMO Long Federal |
BetaPro SP and BMO Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SP and BMO Long
The main advantage of trading using opposite BetaPro SP and BMO Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP position performs unexpectedly, BMO Long 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 Long will offset losses from the drop in BMO Long's long position.| BetaPro SP vs. BetaPro NASDAQ 100 2x | BetaPro SP vs. BetaPro Canadian Gold | BetaPro SP vs. BetaPro Crude Oil | BetaPro SP vs. BetaPro Natural Gas |
| BMO Long vs. iShares MSCI Emerging | BMO Long vs. iShares MSCI Global | BMO Long vs. iShares Core Canadian | BMO Long vs. Vanguard Total Market |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |