Correlation Between BetaPro NASDAQ and BMO Dividend
Can any of the company-specific risk be diversified away by investing in both BetaPro NASDAQ and BMO Dividend 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 Dividend 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 Dividend CAD, you can compare the effects of market volatilities on BetaPro NASDAQ and BMO Dividend 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 Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro NASDAQ and BMO Dividend.
Diversification Opportunities for BetaPro NASDAQ and BMO Dividend
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BetaPro and BMO is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro NASDAQ 100 2x and BMO Dividend CAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Dividend CAD 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 Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Dividend CAD has no effect on the direction of BetaPro NASDAQ i.e., BetaPro NASDAQ and BMO Dividend go up and down completely randomly.
Pair Corralation between BetaPro NASDAQ and BMO Dividend
Assuming the 90 days trading horizon BetaPro NASDAQ 100 2x is expected to under-perform the BMO Dividend. In addition to that, BetaPro NASDAQ is 2.9 times more volatile than BMO Dividend CAD. It trades about -0.1 of its total potential returns per unit of risk. BMO Dividend CAD is currently generating about 0.17 per unit of volatility. If you would invest 3,098 in BMO Dividend CAD on August 29, 2024 and sell it today you would earn a total of 91.00 from holding BMO Dividend CAD or generate 2.94% 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 Dividend CAD
Performance |
| Timeline |
| BetaPro NASDAQ 100 |
| BMO Dividend CAD |
BetaPro NASDAQ and BMO Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro NASDAQ and BMO Dividend
The main advantage of trading using opposite BetaPro NASDAQ and BMO Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro NASDAQ position performs unexpectedly, BMO Dividend 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 Dividend will offset losses from the drop in BMO Dividend'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 Dividend vs. BMO Short Term Bond | BMO Dividend vs. BMO Canadian Bank | BMO Dividend vs. BMO Aggregate Bond | BMO Dividend 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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