Correlation Between Global X and BMO SPTSX
Can any of the company-specific risk be diversified away by investing in both Global X and BMO SPTSX 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 SPTSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Growth and BMO SPTSX Capped, you can compare the effects of market volatilities on Global X and BMO SPTSX 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 SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and BMO SPTSX.
Diversification Opportunities for Global X and BMO SPTSX
Almost no diversification
The 3 months correlation between Global and BMO is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Global X Growth and BMO SPTSX Capped in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO SPTSX Capped 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 Growth are associated (or correlated) with BMO SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO SPTSX Capped has no effect on the direction of Global X i.e., Global X and BMO SPTSX go up and down completely randomly.
Pair Corralation between Global X and BMO SPTSX
Assuming the 90 days trading horizon Global X is expected to generate 1.06 times less return on investment than BMO SPTSX. But when comparing it to its historical volatility, Global X Growth is 1.04 times less risky than BMO SPTSX. It trades about 0.17 of its potential returns per unit of risk. BMO SPTSX Capped is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,562 in BMO SPTSX Capped on September 1, 2024 and sell it today you would earn a total of 882.00 from holding BMO SPTSX Capped or generate 34.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Growth vs. BMO SPTSX Capped
Performance |
| Timeline |
| Global X Growth |
| BMO SPTSX Capped |
Global X and BMO SPTSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and BMO SPTSX
The main advantage of trading using opposite Global X and BMO SPTSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, BMO SPTSX 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 SPTSX will offset losses from the drop in BMO SPTSX's long position.| Global X vs. Brompton Global Dividend | Global X vs. Global Healthcare Income | Global X vs. Tech Leaders Income | Global X vs. Brompton North American |
| BMO SPTSX vs. BMO SP 500 | BMO SPTSX vs. Vanguard FTSE Canada | BMO SPTSX vs. Global X SPTSX | BMO SPTSX vs. iShares Core SP |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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