Correlation Between Global X and BMO Real
Can any of the company-specific risk be diversified away by investing in both Global X and BMO Real 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 Real 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 Real Return, you can compare the effects of market volatilities on Global X and BMO Real 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 Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and BMO Real.
Diversification Opportunities for Global X and BMO Real
Pay attention - limited upside
The 3 months correlation between Global and BMO is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Global X SPTSX and BMO Real Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Real Return 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 Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Real Return has no effect on the direction of Global X i.e., Global X and BMO Real go up and down completely randomly.
Pair Corralation between Global X and BMO Real
Assuming the 90 days trading horizon Global X SPTSX is expected to generate 2.05 times more return on investment than BMO Real. However, Global X is 2.05 times more volatile than BMO Real Return. It trades about 0.04 of its potential returns per unit of risk. BMO Real Return is currently generating about 0.01 per unit of risk. If you would invest 2,990 in Global X SPTSX on September 3, 2024 and sell it today you would earn a total of 743.00 from holding Global X SPTSX or generate 24.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X SPTSX vs. BMO Real Return
Performance |
| Timeline |
| Global X SPTSX |
| BMO Real Return |
Global X and BMO Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and BMO Real
The main advantage of trading using opposite Global X and BMO Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, BMO Real 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 Real will offset losses from the drop in BMO Real's long position.| Global X vs. CI Gold Giants | Global X vs. First Asset Tech | Global X vs. CI Canada Lifeco | Global X vs. Harvest Healthcare Leaders |
| BMO Real vs. BMO Long Corporate | BMO Real vs. BMO Short Provincial | BMO Real vs. BMO Short Federal | BMO Real vs. BMO Emerging Markets |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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