Correlation Between Global X and BMO Mid
Can any of the company-specific risk be diversified away by investing in both Global X and BMO Mid 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 Global X and BMO Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X SPTSX and BMO Mid Corporate, you can compare the effects of market volatilities on Global X and BMO Mid 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 Global X with a short position of BMO Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and BMO Mid.
Diversification Opportunities for Global X and BMO Mid
Very good diversification
The 3 months correlation between Global and BMO is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Global X SPTSX and BMO Mid Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Mid Corporate and Global X 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 Global X SPTSX are associated (or correlated) with BMO Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Mid Corporate has no effect on the direction of Global X i.e., Global X and BMO Mid go up and down completely randomly.
Pair Corralation between Global X and BMO Mid
Assuming the 90 days trading horizon Global X SPTSX is expected to under-perform the BMO Mid. In addition to that, Global X is 3.5 times more volatile than BMO Mid Corporate. It trades about -0.11 of its total potential returns per unit of risk. BMO Mid Corporate is currently generating about 0.19 per unit of volatility. If you would invest 1,557 in BMO Mid Corporate on November 28, 2024 and sell it today you would earn a total of 22.00 from holding BMO Mid Corporate or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X SPTSX vs. BMO Mid Corporate
Performance |
| Timeline |
| Global X SPTSX |
| BMO Mid Corporate |
Global X and BMO Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and BMO Mid
The main advantage of trading using opposite Global X and BMO Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, BMO Mid 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 Mid will offset losses from the drop in BMO Mid's long position.| Global X vs. BMO Equal Weight | Global X vs. Global X Pipelines | Global X vs. Global X Crude | Global X vs. Global X SPTSX |
| BMO Mid vs. BMO Long Corporate | BMO Mid vs. BMO Short Corporate | BMO Mid vs. BMO High Yield | BMO Mid vs. BMO Short Provincial |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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