Correlation Between BetaPro SPTSX and BMO Global
Can any of the company-specific risk be diversified away by investing in both BetaPro SPTSX and BMO Global 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 SPTSX and BMO Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro SPTSX 60 and BMO Global Consumer, you can compare the effects of market volatilities on BetaPro SPTSX and BMO Global 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 SPTSX with a short position of BMO Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SPTSX and BMO Global.
Diversification Opportunities for BetaPro SPTSX and BMO Global
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BetaPro and BMO is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SPTSX 60 and BMO Global Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Global Consumer and BetaPro SPTSX 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 SPTSX 60 are associated (or correlated) with BMO Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Global Consumer has no effect on the direction of BetaPro SPTSX i.e., BetaPro SPTSX and BMO Global go up and down completely randomly.
Pair Corralation between BetaPro SPTSX and BMO Global
Assuming the 90 days trading horizon BetaPro SPTSX is expected to generate 1.6 times less return on investment than BMO Global. In addition to that, BetaPro SPTSX is 1.55 times more volatile than BMO Global Consumer. It trades about 0.05 of its total potential returns per unit of risk. BMO Global Consumer is currently generating about 0.12 per unit of volatility. If you would invest 4,256 in BMO Global Consumer on October 25, 2024 and sell it today you would earn a total of 170.00 from holding BMO Global Consumer or generate 3.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro SPTSX 60 vs. BMO Global Consumer
Performance |
| Timeline |
| BetaPro SPTSX 60 |
| BMO Global Consumer |
BetaPro SPTSX and BMO Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SPTSX and BMO Global
The main advantage of trading using opposite BetaPro SPTSX and BMO Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SPTSX position performs unexpectedly, BMO Global 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 Global will offset losses from the drop in BMO Global's long position.| BetaPro SPTSX vs. BetaPro SPTSX 60 | BetaPro SPTSX vs. BetaPro Equal Weight | BetaPro SPTSX vs. BetaPro Gold Bullion | BetaPro SPTSX vs. BetaPro SP 500 |
| BMO Global vs. BMO Global Consumer | BMO Global vs. BMO Global Communications | BMO Global vs. BMO SPTSX Equal | BMO Global vs. iShares SP Global |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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