Correlation Between PIMCO Investment and BMO Short
Can any of the company-specific risk be diversified away by investing in both PIMCO Investment and BMO Short 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 Short 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 Short Term IG, you can compare the effects of market volatilities on PIMCO Investment and BMO Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Investment and BMO Short.
Diversification Opportunities for PIMCO Investment and BMO Short
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PIMCO and BMO is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Investment Grade and BMO Short Term IG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Short Term 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 Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Short Term has no effect on the direction of PIMCO Investment i.e., PIMCO Investment and BMO Short go up and down completely randomly.
Pair Corralation between PIMCO Investment and BMO Short
Assuming the 90 days trading horizon PIMCO Investment is expected to generate 1.95 times less return on investment than BMO Short. In addition to that, PIMCO Investment is 3.93 times more volatile than BMO Short Term IG. It trades about 0.03 of its total potential returns per unit of risk. BMO Short Term IG is currently generating about 0.21 per unit of volatility. If you would invest 1,331 in BMO Short Term IG on November 27, 2024 and sell it today you would earn a total of 9.00 from holding BMO Short Term IG or generate 0.68% 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 Short Term IG
Performance |
| Timeline |
| PIMCO Investment Grade |
| BMO Short Term |
PIMCO Investment and BMO Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Investment and BMO Short
The main advantage of trading using opposite PIMCO Investment and BMO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Investment position performs unexpectedly, BMO Short 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 Short will offset losses from the drop in BMO Short's long position.| PIMCO Investment vs. PIMCO Monthly Income | PIMCO Investment vs. Desjardins 1 5 Year | PIMCO Investment vs. RBC Quant European | PIMCO Investment vs. CI Investment Grade |
| BMO Short vs. BMO Mid Term IG | BMO Short vs. BMO Short Provincial | BMO Short vs. BMO Short Federal | BMO Short vs. BMO Floating Rate |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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