Correlation Between First Trust and BMO Low
Can any of the company-specific risk be diversified away by investing in both First Trust and BMO Low 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 First Trust and BMO Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Nasdaq and BMO Low Volatility, you can compare the effects of market volatilities on First Trust and BMO Low 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 First Trust with a short position of BMO Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and BMO Low.
Diversification Opportunities for First Trust and BMO Low
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and BMO is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Nasdaq and BMO Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Low Volatility and First Trust 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 First Trust Nasdaq are associated (or correlated) with BMO Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Low Volatility has no effect on the direction of First Trust i.e., First Trust and BMO Low go up and down completely randomly.
Pair Corralation between First Trust and BMO Low
Assuming the 90 days trading horizon First Trust Nasdaq is expected to under-perform the BMO Low. In addition to that, First Trust is 3.25 times more volatile than BMO Low Volatility. It trades about -0.03 of its total potential returns per unit of risk. BMO Low Volatility is currently generating about 0.04 per unit of volatility. If you would invest 3,098 in BMO Low Volatility on November 2, 2024 and sell it today you would earn a total of 380.00 from holding BMO Low Volatility or generate 12.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
First Trust Nasdaq vs. BMO Low Volatility
Performance |
| Timeline |
| First Trust Nasdaq |
| BMO Low Volatility |
First Trust and BMO Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and BMO Low
The main advantage of trading using opposite First Trust and BMO Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, BMO Low 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 Low will offset losses from the drop in BMO Low's long position.| First Trust vs. First Trust Indxx | First Trust vs. First Trust Senior | First Trust vs. First Trust AlphaDEX | First Trust vs. First Trust Indxx |
| BMO Low vs. BMO Low Volatility | BMO Low vs. BMO Low Volatility | BMO Low vs. BMO Low Volatility | BMO Low vs. BMO Dividend CAD |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |