Correlation Between Global X and BMO Low
Can any of the company-specific risk be diversified away by investing in both Global X and BMO Low 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 Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Active and BMO Low Volatility, you can compare the effects of market volatilities on Global X and BMO Low 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 Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and BMO Low.
Diversification Opportunities for Global X and BMO Low
Excellent diversification
The 3 months correlation between Global and BMO is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and BMO Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Low Volatility 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 Active are associated (or correlated) with BMO Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Low Volatility has no effect on the direction of Global X i.e., Global X and BMO Low go up and down completely randomly.
Pair Corralation between Global X and BMO Low
Assuming the 90 days trading horizon Global X Active is expected to generate 0.83 times more return on investment than BMO Low. However, Global X Active is 1.2 times less risky than BMO Low. It trades about 0.11 of its potential returns per unit of risk. BMO Low Volatility is currently generating about 0.04 per unit of risk. If you would invest 724.00 in Global X Active on November 2, 2024 and sell it today you would earn a total of 226.00 from holding Global X Active or generate 31.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Active vs. BMO Low Volatility
Performance |
| Timeline |
| Global X Active |
| BMO Low Volatility |
Global X and BMO Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and BMO Low
The main advantage of trading using opposite Global X and BMO Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, BMO Low 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 Low will offset losses from the drop in BMO Low's long position.The idea behind Global X Active and BMO Low Volatility pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BMO Low vs. BMO Low Volatility | BMO Low vs. BMO Low Volatility | BMO Low vs. BMO Low Volatility | BMO Low vs. BMO Dividend CAD |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Positions Ratings 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 | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |