Correlation Between BetaPro SPTSX and BMO Preferred
Can any of the company-specific risk be diversified away by investing in both BetaPro SPTSX and BMO Preferred 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 Preferred 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 Preferred Share, you can compare the effects of market volatilities on BetaPro SPTSX and BMO Preferred 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 Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SPTSX and BMO Preferred.
Diversification Opportunities for BetaPro SPTSX and BMO Preferred
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BetaPro and BMO is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SPTSX 60 and BMO Preferred Share in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Preferred Share 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 Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Preferred Share has no effect on the direction of BetaPro SPTSX i.e., BetaPro SPTSX and BMO Preferred go up and down completely randomly.
Pair Corralation between BetaPro SPTSX and BMO Preferred
Assuming the 90 days trading horizon BetaPro SPTSX 60 is expected to under-perform the BMO Preferred. In addition to that, BetaPro SPTSX is 2.0 times more volatile than BMO Preferred Share. It trades about -0.26 of its total potential returns per unit of risk. BMO Preferred Share is currently generating about -0.05 per unit of volatility. If you would invest 2,216 in BMO Preferred Share on August 29, 2024 and sell it today you would lose (16.00) from holding BMO Preferred Share or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro SPTSX 60 vs. BMO Preferred Share
Performance |
| Timeline |
| BetaPro SPTSX 60 |
| BMO Preferred Share |
BetaPro SPTSX and BMO Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SPTSX and BMO Preferred
The main advantage of trading using opposite BetaPro SPTSX and BMO Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SPTSX position performs unexpectedly, BMO Preferred 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 Preferred will offset losses from the drop in BMO Preferred'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 Preferred vs. BMO Preferred Share | BMO Preferred vs. BMO High Yield | BMO Preferred vs. BMO Put Write | BMO Preferred vs. BMO Laddered Preferred |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Stocks Directory Find actively traded stocks across global markets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |