Correlation Between Bank Of Montreal and SPDR Russell
Can any of the company-specific risk be diversified away by investing in both Bank Of Montreal and SPDR Russell 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 Bank Of Montreal and SPDR Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Of Montreal and SPDR Russell 1000, you can compare the effects of market volatilities on Bank Of Montreal and SPDR Russell 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 Bank Of Montreal with a short position of SPDR Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Of Montreal and SPDR Russell.
Diversification Opportunities for Bank Of Montreal and SPDR Russell
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and SPDR is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of Montreal and SPDR Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Russell 1000 and Bank Of Montreal 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 Bank Of Montreal are associated (or correlated) with SPDR Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Russell 1000 has no effect on the direction of Bank Of Montreal i.e., Bank Of Montreal and SPDR Russell go up and down completely randomly.
Pair Corralation between Bank Of Montreal and SPDR Russell
Given the investment horizon of 90 days Bank Of Montreal is expected to generate 4.05 times more return on investment than SPDR Russell. However, Bank Of Montreal is 4.05 times more volatile than SPDR Russell 1000. It trades about 0.05 of its potential returns per unit of risk. SPDR Russell 1000 is currently generating about 0.12 per unit of risk. If you would invest 44,661 in Bank Of Montreal on August 27, 2024 and sell it today you would earn a total of 5,587 from holding Bank Of Montreal or generate 12.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 55.32% |
| Values | Daily Returns |
Bank Of Montreal vs. SPDR Russell 1000
Performance |
| Timeline |
| Bank Of Montreal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SPDR Russell 1000 |
Bank Of Montreal and SPDR Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Of Montreal and SPDR Russell
The main advantage of trading using opposite Bank Of Montreal and SPDR Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Of Montreal position performs unexpectedly, SPDR Russell 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 SPDR Russell will offset losses from the drop in SPDR Russell's long position.| Bank Of Montreal vs. MicroSectors FANG Index | Bank Of Montreal vs. MicroSectors Solactive FANG | Bank Of Montreal vs. Direxion Daily Regional |
| SPDR Russell vs. SPDR Russell 1000 | SPDR Russell vs. SPDR MSCI USA | SPDR Russell vs. SPDR SP 400 | SPDR Russell vs. SPDR MSCI EAFE |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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