Correlation Between Global X and BMO Canadian
Can any of the company-specific risk be diversified away by investing in both Global X and BMO Canadian 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 Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Canadian and BMO Canadian High, you can compare the effects of market volatilities on Global X and BMO Canadian 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 Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and BMO Canadian.
Diversification Opportunities for Global X and BMO Canadian
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and BMO is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Global X Canadian and BMO Canadian High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Canadian High 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 Canadian are associated (or correlated) with BMO Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Canadian High has no effect on the direction of Global X i.e., Global X and BMO Canadian go up and down completely randomly.
Pair Corralation between Global X and BMO Canadian
Assuming the 90 days trading horizon Global X is expected to generate 1.15 times less return on investment than BMO Canadian. In addition to that, Global X is 1.03 times more volatile than BMO Canadian High. It trades about 0.19 of its total potential returns per unit of risk. BMO Canadian High is currently generating about 0.23 per unit of volatility. If you would invest 1,778 in BMO Canadian High on November 3, 2024 and sell it today you would earn a total of 41.00 from holding BMO Canadian High or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Canadian vs. BMO Canadian High
Performance |
| Timeline |
| Global X Canadian |
| BMO Canadian High |
Global X and BMO Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and BMO Canadian
The main advantage of trading using opposite Global X and BMO Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, BMO Canadian 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 Canadian will offset losses from the drop in BMO Canadian's long position.| Global X vs. Global X SPTSX | Global X vs. Global X SPTSX | Global X vs. Global X SP | Global X vs. Global X Europe |
| BMO Canadian vs. BMO Short Term Bond | BMO Canadian vs. BMO Canadian Bank | BMO Canadian vs. BMO Aggregate Bond | BMO Canadian 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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