Correlation Between BetaPro SPTSX and BMO Short
Can any of the company-specific risk be diversified away by investing in both BetaPro SPTSX and BMO Short 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 Short 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 Short Corporate, you can compare the effects of market volatilities on BetaPro SPTSX and BMO Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SPTSX and BMO Short.
Diversification Opportunities for BetaPro SPTSX and BMO Short
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BetaPro and BMO is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SPTSX 60 and BMO Short Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Short Corporate 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 Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Short Corporate has no effect on the direction of BetaPro SPTSX i.e., BetaPro SPTSX and BMO Short go up and down completely randomly.
Pair Corralation between BetaPro SPTSX and BMO Short
Assuming the 90 days trading horizon BetaPro SPTSX 60 is expected to under-perform the BMO Short. In addition to that, BetaPro SPTSX is 9.27 times more volatile than BMO Short Corporate. It trades about -0.27 of its total potential returns per unit of risk. BMO Short Corporate is currently generating about -0.1 per unit of volatility. If you would invest 1,382 in BMO Short Corporate on August 25, 2024 and sell it today you would lose (4.00) from holding BMO Short Corporate or give up 0.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BetaPro SPTSX 60 vs. BMO Short Corporate
Performance |
| Timeline |
| BetaPro SPTSX 60 |
| BMO Short Corporate |
BetaPro SPTSX and BMO Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SPTSX and BMO Short
The main advantage of trading using opposite BetaPro SPTSX and BMO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SPTSX position performs unexpectedly, BMO Short 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 Short will offset losses from the drop in BMO Short's long position.| BetaPro SPTSX vs. BetaPro Gold Bullion | BetaPro SPTSX vs. BetaPro NASDAQ 100 2x | BetaPro SPTSX vs. BetaPro SP TSX | BetaPro SPTSX vs. BetaPro SP TSX |
| BMO Short vs. BMO Long Federal | BMO Short vs. BMO Mid Federal | BMO Short vs. BMO Mid Corporate | BMO Short vs. BMO High Yield |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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