Correlation Between BetaPro NASDAQ and BMO Equal
Can any of the company-specific risk be diversified away by investing in both BetaPro NASDAQ and BMO Equal 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 NASDAQ and BMO Equal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro NASDAQ 100 2x and BMO Equal Weight, you can compare the effects of market volatilities on BetaPro NASDAQ and BMO Equal 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 NASDAQ with a short position of BMO Equal. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro NASDAQ and BMO Equal.
Diversification Opportunities for BetaPro NASDAQ and BMO Equal
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between BetaPro and BMO is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro NASDAQ 100 2x and BMO Equal Weight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Equal Weight and BetaPro NASDAQ 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 NASDAQ 100 2x are associated (or correlated) with BMO Equal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Equal Weight has no effect on the direction of BetaPro NASDAQ i.e., BetaPro NASDAQ and BMO Equal go up and down completely randomly.
Pair Corralation between BetaPro NASDAQ and BMO Equal
Assuming the 90 days trading horizon BetaPro NASDAQ 100 2x is expected to generate 1.83 times more return on investment than BMO Equal. However, BetaPro NASDAQ is 1.83 times more volatile than BMO Equal Weight. It trades about 0.22 of its potential returns per unit of risk. BMO Equal Weight is currently generating about -0.16 per unit of risk. If you would invest 996.00 in BetaPro NASDAQ 100 2x on December 1, 2024 and sell it today you would earn a total of 95.00 from holding BetaPro NASDAQ 100 2x or generate 9.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro NASDAQ 100 2x vs. BMO Equal Weight
Performance |
| Timeline |
| BetaPro NASDAQ 100 |
| BMO Equal Weight |
BetaPro NASDAQ and BMO Equal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro NASDAQ and BMO Equal
The main advantage of trading using opposite BetaPro NASDAQ and BMO Equal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro NASDAQ position performs unexpectedly, BMO Equal 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 Equal will offset losses from the drop in BMO Equal's long position.| BetaPro NASDAQ vs. BetaPro SP 500 | BetaPro NASDAQ vs. BetaPro NASDAQ 100 2x | BetaPro NASDAQ vs. BetaPro SP 500 | BetaPro NASDAQ vs. BetaPro SPTSX 60 |
| BMO Equal vs. BMO Short Term Bond | BMO Equal vs. BMO Canadian Bank | BMO Equal vs. BMO Aggregate Bond | BMO Equal vs. BMO Balanced ETF |
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
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |