Correlation Between VanEck Oil and Bank of Montreal
Can any of the company-specific risk be diversified away by investing in both VanEck Oil 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 VanEck Oil 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 VanEck Oil Services and Bank of Montreal, you can compare the effects of market volatilities on VanEck Oil 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 VanEck Oil with a short position of Bank of Montreal. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Oil and Bank of Montreal.
Diversification Opportunities for VanEck Oil and Bank of Montreal
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VanEck and Bank is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Oil Services 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 VanEck Oil 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 VanEck Oil Services 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 VanEck Oil i.e., VanEck Oil and Bank of Montreal go up and down completely randomly.
Pair Corralation between VanEck Oil and Bank of Montreal
Considering the 90-day investment horizon VanEck Oil Services is expected to under-perform the Bank of Montreal. But the etf apears to be less risky and, when comparing its historical volatility, VanEck Oil Services is 2.91 times less risky than Bank of Montreal. The etf trades about -0.01 of its potential returns per unit of risk. The Bank of Montreal is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,684 in Bank of Montreal on September 1, 2024 and sell it today you would earn a total of 1,317 from holding Bank of Montreal or generate 78.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
VanEck Oil Services vs. Bank of Montreal
Performance |
| Timeline |
| VanEck Oil Services |
| Bank of Montreal |
VanEck Oil and Bank of Montreal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Oil and Bank of Montreal
The main advantage of trading using opposite VanEck Oil and Bank of Montreal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Oil 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.| VanEck Oil vs. SPDR SP Oil | VanEck Oil vs. Energy Select Sector | VanEck Oil vs. VanEck Semiconductor ETF | VanEck Oil vs. Materials Select Sector |
| Bank of Montreal vs. First Trust Exchange Traded | Bank of Montreal vs. Ultimus Managers Trust | Bank of Montreal vs. Horizon Kinetics Medical | Bank of Montreal vs. Harbor Health Care |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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