Correlation Between BetaPro SPTSX and BMO Aggregate
Can any of the company-specific risk be diversified away by investing in both BetaPro SPTSX and BMO Aggregate 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 Aggregate 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 Aggregate Bond, you can compare the effects of market volatilities on BetaPro SPTSX and BMO Aggregate 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 Aggregate. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SPTSX and BMO Aggregate.
Diversification Opportunities for BetaPro SPTSX and BMO Aggregate
-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 Aggregate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Aggregate Bond 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 Aggregate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Aggregate Bond has no effect on the direction of BetaPro SPTSX i.e., BetaPro SPTSX and BMO Aggregate go up and down completely randomly.
Pair Corralation between BetaPro SPTSX and BMO Aggregate
Assuming the 90 days trading horizon BetaPro SPTSX 60 is expected to under-perform the BMO Aggregate. In addition to that, BetaPro SPTSX is 3.67 times more volatile than BMO Aggregate Bond. It trades about -0.2 of its total potential returns per unit of risk. BMO Aggregate Bond is currently generating about 0.13 per unit of volatility. If you would invest 1,389 in BMO Aggregate Bond on November 3, 2024 and sell it today you would earn a total of 15.00 from holding BMO Aggregate Bond or generate 1.08% 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 Aggregate Bond
Performance |
| Timeline |
| BetaPro SPTSX 60 |
| BMO Aggregate Bond |
BetaPro SPTSX and BMO Aggregate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SPTSX and BMO Aggregate
The main advantage of trading using opposite BetaPro SPTSX and BMO Aggregate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SPTSX position performs unexpectedly, BMO Aggregate 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 Aggregate will offset losses from the drop in BMO Aggregate'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 Aggregate vs. iShares Core MSCI | BMO Aggregate vs. Vanguard FTSE Canada | BMO Aggregate vs. Vanguard Canadian Aggregate | BMO Aggregate vs. iShares Core MSCI |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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