Correlation Between BetaPro SPTSX and BMO Equal
Can any of the company-specific risk be diversified away by investing in both BetaPro SPTSX and BMO Equal 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 Equal 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 Equal Weight, you can compare the effects of market volatilities on BetaPro SPTSX and BMO Equal 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 Equal. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SPTSX and BMO Equal.
Diversification Opportunities for BetaPro SPTSX and BMO Equal
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BetaPro and BMO is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SPTSX 60 and BMO Equal Weight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Equal Weight 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 Equal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Equal Weight has no effect on the direction of BetaPro SPTSX i.e., BetaPro SPTSX and BMO Equal go up and down completely randomly.
Pair Corralation between BetaPro SPTSX and BMO Equal
Assuming the 90 days trading horizon BetaPro SPTSX 60 is expected to under-perform the BMO Equal. But the etf apears to be less risky and, when comparing its historical volatility, BetaPro SPTSX 60 is 1.21 times less risky than BMO Equal. The etf trades about -0.12 of its potential returns per unit of risk. The BMO Equal Weight is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,864 in BMO Equal Weight on September 3, 2024 and sell it today you would earn a total of 1,130 from holding BMO Equal Weight or generate 39.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro SPTSX 60 vs. BMO Equal Weight
Performance |
| Timeline |
| BetaPro SPTSX 60 |
| BMO Equal Weight |
BetaPro SPTSX and BMO Equal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SPTSX and BMO Equal
The main advantage of trading using opposite BetaPro SPTSX and BMO Equal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SPTSX position performs unexpectedly, BMO Equal 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 Equal will offset losses from the drop in BMO Equal's long position.| BetaPro SPTSX vs. BetaPro SP TSX | BetaPro SPTSX vs. BetaPro SP TSX | BetaPro SPTSX vs. BetaPro SPTSX Capped | BetaPro SPTSX vs. BetaPro Gold Bullion |
| BMO Equal vs. BMO Short Term Bond | BMO Equal vs. BMO Canadian Bank | BMO Equal vs. BMO Aggregate Bond | BMO Equal 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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