Correlation Between BetaPro NASDAQ and BMO SIA
Can any of the company-specific risk be diversified away by investing in both BetaPro NASDAQ and BMO SIA 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 SIA 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 SIA Focused, you can compare the effects of market volatilities on BetaPro NASDAQ and BMO SIA 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 SIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro NASDAQ and BMO SIA.
Diversification Opportunities for BetaPro NASDAQ and BMO SIA
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BetaPro and BMO is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro NASDAQ 100 2x and BMO SIA Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO SIA Focused 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 SIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO SIA Focused has no effect on the direction of BetaPro NASDAQ i.e., BetaPro NASDAQ and BMO SIA go up and down completely randomly.
Pair Corralation between BetaPro NASDAQ and BMO SIA
Assuming the 90 days trading horizon BetaPro NASDAQ 100 2x is expected to generate 17.3 times more return on investment than BMO SIA. However, BetaPro NASDAQ is 17.3 times more volatile than BMO SIA Focused. It trades about 0.03 of its potential returns per unit of risk. BMO SIA Focused is currently generating about 0.1 per unit of risk. If you would invest 808.00 in BetaPro NASDAQ 100 2x on September 4, 2024 and sell it today you would earn a total of 224.00 from holding BetaPro NASDAQ 100 2x or generate 27.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro NASDAQ 100 2x vs. BMO SIA Focused
Performance |
| Timeline |
| BetaPro NASDAQ 100 |
| BMO SIA Focused |
BetaPro NASDAQ and BMO SIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro NASDAQ and BMO SIA
The main advantage of trading using opposite BetaPro NASDAQ and BMO SIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro NASDAQ position performs unexpectedly, BMO SIA 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 SIA will offset losses from the drop in BMO SIA'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 SIA vs. BMO SIA Focused | BMO SIA vs. BMO MSCI USA | BMO SIA vs. BMO Low Volatility | BMO SIA 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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