Correlation Between IA Clarington and BMO Growth
Can any of the company-specific risk be diversified away by investing in both IA Clarington and BMO Growth 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 IA Clarington and BMO Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IA Clarington Core and BMO Growth ETF, you can compare the effects of market volatilities on IA Clarington and BMO Growth 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 IA Clarington with a short position of BMO Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA Clarington and BMO Growth.
Diversification Opportunities for IA Clarington and BMO Growth
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ICPB and BMO is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding IA Clarington Core and BMO Growth ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Growth ETF and IA Clarington 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 IA Clarington Core are associated (or correlated) with BMO Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Growth ETF has no effect on the direction of IA Clarington i.e., IA Clarington and BMO Growth go up and down completely randomly.
Pair Corralation between IA Clarington and BMO Growth
Assuming the 90 days trading horizon IA Clarington is expected to generate 3.33 times less return on investment than BMO Growth. But when comparing it to its historical volatility, IA Clarington Core is 1.83 times less risky than BMO Growth. It trades about 0.13 of its potential returns per unit of risk. BMO Growth ETF is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,325 in BMO Growth ETF on August 29, 2024 and sell it today you would earn a total of 300.00 from holding BMO Growth ETF or generate 6.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IA Clarington Core vs. BMO Growth ETF
Performance |
| Timeline |
| IA Clarington Core |
| BMO Growth ETF |
IA Clarington and BMO Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IA Clarington and BMO Growth
The main advantage of trading using opposite IA Clarington and BMO Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Clarington position performs unexpectedly, BMO Growth 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 Growth will offset losses from the drop in BMO Growth's long position.| IA Clarington vs. IA Clarington Floating | IA Clarington vs. IA Clarington Loomis | IA Clarington vs. Global X Active | IA Clarington vs. IA Clarington Strategic |
| BMO Growth vs. BMO Balanced ETF | BMO Growth vs. BMO Conservative ETF | BMO Growth vs. iShares Core Growth | BMO Growth vs. iShares Core Balanced |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |