Correlation Between BetaPro SP and BMO NASDAQ
Can any of the company-specific risk be diversified away by investing in both BetaPro SP and BMO NASDAQ 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 NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro SP 500 and BMO NASDAQ 100, you can compare the effects of market volatilities on BetaPro SP and BMO NASDAQ 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 NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and BMO NASDAQ.
Diversification Opportunities for BetaPro SP and BMO NASDAQ
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BetaPro and BMO is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP 500 and BMO NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO NASDAQ 100 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 500 are associated (or correlated) with BMO NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO NASDAQ 100 has no effect on the direction of BetaPro SP i.e., BetaPro SP and BMO NASDAQ go up and down completely randomly.
Pair Corralation between BetaPro SP and BMO NASDAQ
Assuming the 90 days trading horizon BetaPro SP 500 is expected to under-perform the BMO NASDAQ. But the etf apears to be less risky and, when comparing its historical volatility, BetaPro SP 500 is 1.46 times less risky than BMO NASDAQ. The etf trades about -0.07 of its potential returns per unit of risk. The BMO NASDAQ 100 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 12,331 in BMO NASDAQ 100 on October 24, 2024 and sell it today you would earn a total of 2,673 from holding BMO NASDAQ 100 or generate 21.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro SP 500 vs. BMO NASDAQ 100
Performance |
| Timeline |
| BetaPro SP 500 |
| BMO NASDAQ 100 |
BetaPro SP and BMO NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SP and BMO NASDAQ
The main advantage of trading using opposite BetaPro SP and BMO NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP position performs unexpectedly, BMO NASDAQ 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 NASDAQ will offset losses from the drop in BMO NASDAQ's long position.| BetaPro SP vs. BetaPro SPTSX 60 | BetaPro SP vs. BetaPro NASDAQ 100 2x | BetaPro SP vs. BetaPro SP 500 | BetaPro SP vs. BetaPro Gold Bullion |
| BMO NASDAQ vs. Vanguard FTSE Canada | BMO NASDAQ vs. iShares Core MSCI | BMO NASDAQ vs. iShares Core MSCI | BMO NASDAQ 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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