Correlation Between BetaPro NASDAQ and BMO High
Can any of the company-specific risk be diversified away by investing in both BetaPro NASDAQ and BMO High 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 High 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 High Yield, you can compare the effects of market volatilities on BetaPro NASDAQ and BMO High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro NASDAQ and BMO High.
Diversification Opportunities for BetaPro NASDAQ and BMO High
-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 NASDAQ 100 2x and BMO High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO High Yield 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 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO High Yield has no effect on the direction of BetaPro NASDAQ i.e., BetaPro NASDAQ and BMO High go up and down completely randomly.
Pair Corralation between BetaPro NASDAQ and BMO High
Assuming the 90 days trading horizon BetaPro NASDAQ 100 2x is expected to under-perform the BMO High. In addition to that, BetaPro NASDAQ is 6.41 times more volatile than BMO High Yield. It trades about -0.07 of its total potential returns per unit of risk. BMO High Yield is currently generating about 0.08 per unit of volatility. If you would invest 1,063 in BMO High Yield on August 25, 2024 and sell it today you would earn a total of 71.00 from holding BMO High Yield or generate 6.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro NASDAQ 100 2x vs. BMO High Yield
Performance |
| Timeline |
| BetaPro NASDAQ 100 |
| BMO High Yield |
BetaPro NASDAQ and BMO High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro NASDAQ and BMO High
The main advantage of trading using opposite BetaPro NASDAQ and BMO High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro NASDAQ position performs unexpectedly, BMO High 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 High will offset losses from the drop in BMO High's long position.| BetaPro NASDAQ vs. BetaPro NASDAQ 100 2x | BetaPro NASDAQ vs. BetaPro Canadian Gold | BetaPro NASDAQ vs. BetaPro Crude Oil | BetaPro NASDAQ vs. BetaPro Crude Oil |
| BMO High vs. BMO Mid Federal | BMO High vs. BMO Short Corporate | BMO High vs. BMO Emerging Markets | BMO High vs. BMO Long Corporate |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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