Correlation Between FlexShares STOXX and Bank of Montreal
Can any of the company-specific risk be diversified away by investing in both FlexShares STOXX and Bank of Montreal 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 FlexShares STOXX and Bank of Montreal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares STOXX Global and Bank of Montreal, you can compare the effects of market volatilities on FlexShares STOXX and Bank of Montreal 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 FlexShares STOXX with a short position of Bank of Montreal. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares STOXX and Bank of Montreal.
Diversification Opportunities for FlexShares STOXX and Bank of Montreal
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FlexShares and Bank is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares STOXX Global and Bank of Montreal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Montreal and FlexShares STOXX 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 FlexShares STOXX Global are associated (or correlated) with Bank of Montreal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Montreal has no effect on the direction of FlexShares STOXX i.e., FlexShares STOXX and Bank of Montreal go up and down completely randomly.
Pair Corralation between FlexShares STOXX and Bank of Montreal
Given the investment horizon of 90 days FlexShares STOXX Global is expected to generate 0.17 times more return on investment than Bank of Montreal. However, FlexShares STOXX Global is 5.76 times less risky than Bank of Montreal. It trades about 0.17 of its potential returns per unit of risk. Bank of Montreal is currently generating about -0.35 per unit of risk. If you would invest 5,743 in FlexShares STOXX Global on September 4, 2024 and sell it today you would earn a total of 104.00 from holding FlexShares STOXX Global or generate 1.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares STOXX Global vs. Bank of Montreal
Performance |
| Timeline |
| FlexShares STOXX Global |
| Bank of Montreal |
FlexShares STOXX and Bank of Montreal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares STOXX and Bank of Montreal
The main advantage of trading using opposite FlexShares STOXX and Bank of Montreal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares STOXX position performs unexpectedly, Bank of Montreal 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 Bank of Montreal will offset losses from the drop in Bank of Montreal's long position.| FlexShares STOXX vs. ProShares DJ Brookfield | FlexShares STOXX vs. iShares Global Infrastructure | FlexShares STOXX vs. SPDR SP Global | FlexShares STOXX vs. iShares Infrastructure ETF |
| Bank of Montreal vs. First Trust Indxx | Bank of Montreal vs. Direxion Daily Industrials | Bank of Montreal vs. NATO | Bank of Montreal vs. FlexShares STOXX Global |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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