Correlation Between BetaPro Crude and BMO Short
Can any of the company-specific risk be diversified away by investing in both BetaPro Crude and BMO Short 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 Crude and BMO Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro Crude Oil and BMO Short Provincial, you can compare the effects of market volatilities on BetaPro Crude and BMO Short 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 Crude with a short position of BMO Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro Crude and BMO Short.
Diversification Opportunities for BetaPro Crude and BMO Short
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BetaPro and BMO is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Crude Oil and BMO Short Provincial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Short Provincial and BetaPro Crude 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 Crude Oil are associated (or correlated) with BMO Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Short Provincial has no effect on the direction of BetaPro Crude i.e., BetaPro Crude and BMO Short go up and down completely randomly.
Pair Corralation between BetaPro Crude and BMO Short
Assuming the 90 days trading horizon BetaPro Crude Oil is expected to generate 24.65 times more return on investment than BMO Short. However, BetaPro Crude is 24.65 times more volatile than BMO Short Provincial. It trades about 0.05 of its potential returns per unit of risk. BMO Short Provincial is currently generating about -0.02 per unit of risk. If you would invest 1,112 in BetaPro Crude Oil on August 28, 2024 and sell it today you would earn a total of 26.00 from holding BetaPro Crude Oil or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro Crude Oil vs. BMO Short Provincial
Performance |
| Timeline |
| BetaPro Crude Oil |
| BMO Short Provincial |
BetaPro Crude and BMO Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro Crude and BMO Short
The main advantage of trading using opposite BetaPro Crude and BMO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro Crude position performs unexpectedly, BMO Short 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 Short will offset losses from the drop in BMO Short's long position.| BetaPro Crude vs. BetaPro Gold Bullion | BetaPro Crude vs. BetaPro NASDAQ 100 2x | BetaPro Crude vs. BetaPro SP TSX | BetaPro Crude vs. BetaPro SP TSX |
| BMO Short vs. Mackenzie Canadian Aggregate | BMO Short vs. Mackenzie Core Plus | BMO Short vs. Mackenzie Investment Grade | BMO Short vs. Mackenzie Core Plus |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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