Correlation Between Accelerate OneChoice and BMO Short
Can any of the company-specific risk be diversified away by investing in both Accelerate OneChoice and BMO Short 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 Short 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 Short Term Bond, you can compare the effects of market volatilities on Accelerate OneChoice and BMO Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accelerate OneChoice and BMO Short.
Diversification Opportunities for Accelerate OneChoice and BMO Short
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Accelerate and BMO is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Accelerate OneChoice Alternati and BMO Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Short Term 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 Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Short Term has no effect on the direction of Accelerate OneChoice i.e., Accelerate OneChoice and BMO Short go up and down completely randomly.
Pair Corralation between Accelerate OneChoice and BMO Short
Assuming the 90 days trading horizon Accelerate OneChoice is expected to generate 1.37 times less return on investment than BMO Short. In addition to that, Accelerate OneChoice is 4.12 times more volatile than BMO Short Term Bond. It trades about 0.03 of its total potential returns per unit of risk. BMO Short Term Bond is currently generating about 0.18 per unit of volatility. If you would invest 4,885 in BMO Short Term Bond on December 1, 2024 and sell it today you would earn a total of 28.00 from holding BMO Short Term Bond or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Accelerate OneChoice Alternati vs. BMO Short Term Bond
Performance |
| Timeline |
| Accelerate OneChoice |
| BMO Short Term |
Accelerate OneChoice and BMO Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Accelerate OneChoice and BMO Short
The main advantage of trading using opposite Accelerate OneChoice and BMO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accelerate OneChoice position performs unexpectedly, BMO Short 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 Short will offset losses from the drop in BMO Short'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 Short vs. BMO Corporate Bond | BMO Short vs. BMO Government Bond | BMO Short vs. BMO Ultra Short Term | BMO Short vs. BMO Short Term IG |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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