Correlation Between Global X and BMO Covered
Can any of the company-specific risk be diversified away by investing in both Global X and BMO Covered 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 Covered into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Natural and BMO Covered Call, you can compare the effects of market volatilities on Global X and BMO Covered 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 Covered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and BMO Covered.
Diversification Opportunities for Global X and BMO Covered
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and BMO is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Global X Natural and BMO Covered Call in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Covered Call 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 Natural are associated (or correlated) with BMO Covered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Covered Call has no effect on the direction of Global X i.e., Global X and BMO Covered go up and down completely randomly.
Pair Corralation between Global X and BMO Covered
Assuming the 90 days trading horizon Global X is expected to generate 1.09 times less return on investment than BMO Covered. In addition to that, Global X is 1.3 times more volatile than BMO Covered Call. It trades about 0.23 of its total potential returns per unit of risk. BMO Covered Call is currently generating about 0.32 per unit of volatility. If you would invest 2,314 in BMO Covered Call on September 3, 2024 and sell it today you would earn a total of 337.00 from holding BMO Covered Call or generate 14.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Natural vs. BMO Covered Call
Performance |
| Timeline |
| Global X Natural |
| BMO Covered Call |
Global X and BMO Covered Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and BMO Covered
The main advantage of trading using opposite Global X and BMO Covered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, BMO Covered 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 Covered will offset losses from the drop in BMO Covered's long position.| Global X vs. Global X Crude | Global X vs. Global X Gold | Global X vs. Global X Active | Global X vs. Global X Active |
| BMO Covered vs. BMO Global High | BMO Covered vs. BMO Covered Call | BMO Covered vs. BMO Europe High | BMO Covered vs. BMO Canadian High |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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