Correlation Between Mackenzie Core and BMO Discount
Can any of the company-specific risk be diversified away by investing in both Mackenzie Core and BMO Discount 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 Mackenzie Core and BMO Discount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mackenzie Core Plus and BMO Discount Bond, you can compare the effects of market volatilities on Mackenzie Core and BMO Discount 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 Mackenzie Core with a short position of BMO Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie Core and BMO Discount.
Diversification Opportunities for Mackenzie Core and BMO Discount
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mackenzie and BMO is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie Core Plus and BMO Discount Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Discount Bond and Mackenzie Core 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 Mackenzie Core Plus are associated (or correlated) with BMO Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Discount Bond has no effect on the direction of Mackenzie Core i.e., Mackenzie Core and BMO Discount go up and down completely randomly.
Pair Corralation between Mackenzie Core and BMO Discount
Assuming the 90 days trading horizon Mackenzie Core is expected to generate 1.06 times less return on investment than BMO Discount. In addition to that, Mackenzie Core is 1.02 times more volatile than BMO Discount Bond. It trades about 0.08 of its total potential returns per unit of risk. BMO Discount Bond is currently generating about 0.09 per unit of volatility. If you would invest 1,345 in BMO Discount Bond on August 25, 2024 and sell it today you would earn a total of 143.00 from holding BMO Discount Bond or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mackenzie Core Plus vs. BMO Discount Bond
Performance |
| Timeline |
| Mackenzie Core Plus |
| BMO Discount Bond |
Mackenzie Core and BMO Discount Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mackenzie Core and BMO Discount
The main advantage of trading using opposite Mackenzie Core and BMO Discount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mackenzie Core position performs unexpectedly, BMO Discount 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 Discount will offset losses from the drop in BMO Discount's long position.| Mackenzie Core vs. Mackenzie Core Plus | Mackenzie Core vs. Mackenzie Floating Rate | Mackenzie Core vs. Mackenzie Unconstrained Bond | Mackenzie Core vs. Mackenzie Canadian Short |
| BMO Discount vs. Mackenzie Core Plus | BMO Discount vs. Mackenzie Unconstrained Bond | BMO Discount vs. Mackenzie Floating Rate | BMO Discount vs. Mackenzie Canadian Aggregate |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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