Correlation Between PIMCO Investment and BMO Mid
Can any of the company-specific risk be diversified away by investing in both PIMCO Investment 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 PIMCO Investment and BMO Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO Investment Grade and BMO Mid Corporate, you can compare the effects of market volatilities on PIMCO Investment 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 PIMCO Investment with a short position of BMO Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Investment and BMO Mid.
Diversification Opportunities for PIMCO Investment and BMO Mid
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PIMCO and BMO is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Investment Grade 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 PIMCO Investment 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 PIMCO Investment Grade 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 PIMCO Investment i.e., PIMCO Investment and BMO Mid go up and down completely randomly.
Pair Corralation between PIMCO Investment and BMO Mid
Assuming the 90 days trading horizon PIMCO Investment is expected to generate 2.12 times less return on investment than BMO Mid. In addition to that, PIMCO Investment is 1.69 times more volatile than BMO Mid Corporate. It trades about 0.06 of its total potential returns per unit of risk. BMO Mid Corporate is currently generating about 0.2 per unit of volatility. If you would invest 1,533 in BMO Mid Corporate on September 1, 2024 and sell it today you would earn a total of 27.00 from holding BMO Mid Corporate or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO Investment Grade vs. BMO Mid Corporate
Performance |
| Timeline |
| PIMCO Investment Grade |
| BMO Mid Corporate |
PIMCO Investment and BMO Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Investment and BMO Mid
The main advantage of trading using opposite PIMCO Investment and BMO Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Investment 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.| PIMCO Investment vs. BMO Mid Corporate | PIMCO Investment vs. CI Canadian Banks | PIMCO Investment vs. BMO Long Corporate | PIMCO Investment vs. Hamilton MidSmall Cap Financials |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |