Correlation Between Accelerate OneChoice and BMO Canadian
Can any of the company-specific risk be diversified away by investing in both Accelerate OneChoice and BMO Canadian 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 Accelerate OneChoice and BMO Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accelerate OneChoice Alternative and BMO Canadian Bank, you can compare the effects of market volatilities on Accelerate OneChoice and BMO Canadian 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 Accelerate OneChoice with a short position of BMO Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accelerate OneChoice and BMO Canadian.
Diversification Opportunities for Accelerate OneChoice and BMO Canadian
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Accelerate and BMO is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Accelerate OneChoice Alternati and BMO Canadian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Canadian Bank and Accelerate OneChoice 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 Accelerate OneChoice Alternative are associated (or correlated) with BMO Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Canadian Bank has no effect on the direction of Accelerate OneChoice i.e., Accelerate OneChoice and BMO Canadian go up and down completely randomly.
Pair Corralation between Accelerate OneChoice and BMO Canadian
Assuming the 90 days trading horizon Accelerate OneChoice Alternative is expected to generate 2.3 times more return on investment than BMO Canadian. However, Accelerate OneChoice is 2.3 times more volatile than BMO Canadian Bank. It trades about 0.09 of its potential returns per unit of risk. BMO Canadian Bank is currently generating about 0.15 per unit of risk. If you would invest 1,897 in Accelerate OneChoice Alternative on September 1, 2024 and sell it today you would earn a total of 451.00 from holding Accelerate OneChoice Alternative or generate 23.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Accelerate OneChoice Alternati vs. BMO Canadian Bank
Performance |
| Timeline |
| Accelerate OneChoice |
| BMO Canadian Bank |
Accelerate OneChoice and BMO Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Accelerate OneChoice and BMO Canadian
The main advantage of trading using opposite Accelerate OneChoice and BMO Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accelerate OneChoice position performs unexpectedly, BMO Canadian 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 Canadian will offset losses from the drop in BMO Canadian's long position.| Accelerate OneChoice vs. Accelerate Arbitrage | Accelerate OneChoice vs. Accelerate Absolute Return | Accelerate OneChoice vs. NBI High Yield | Accelerate OneChoice vs. NBI Unconstrained Fixed |
| BMO Canadian vs. BMO Short Term Bond | BMO Canadian vs. BMO Aggregate Bond | BMO Canadian vs. BMO Balanced ETF | BMO Canadian vs. BMO Aggregate Bond |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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