Correlation Between Mackenzie Canadian and BMO MSCI
Can any of the company-specific risk be diversified away by investing in both Mackenzie Canadian and BMO MSCI 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 Mackenzie Canadian and BMO MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mackenzie Canadian Equity and BMO MSCI EAFE, you can compare the effects of market volatilities on Mackenzie Canadian and BMO MSCI 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 Mackenzie Canadian with a short position of BMO MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie Canadian and BMO MSCI.
Diversification Opportunities for Mackenzie Canadian and BMO MSCI
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mackenzie and BMO is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie Canadian Equity and BMO MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO MSCI EAFE and Mackenzie Canadian 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 Mackenzie Canadian Equity are associated (or correlated) with BMO MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO MSCI EAFE has no effect on the direction of Mackenzie Canadian i.e., Mackenzie Canadian and BMO MSCI go up and down completely randomly.
Pair Corralation between Mackenzie Canadian and BMO MSCI
Assuming the 90 days trading horizon Mackenzie Canadian Equity is expected to generate 0.9 times more return on investment than BMO MSCI. However, Mackenzie Canadian Equity is 1.12 times less risky than BMO MSCI. It trades about 0.3 of its potential returns per unit of risk. BMO MSCI EAFE is currently generating about -0.19 per unit of risk. If you would invest 14,971 in Mackenzie Canadian Equity on August 29, 2024 and sell it today you would earn a total of 534.00 from holding Mackenzie Canadian Equity or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mackenzie Canadian Equity vs. BMO MSCI EAFE
Performance |
| Timeline |
| Mackenzie Canadian Equity |
| BMO MSCI EAFE |
Mackenzie Canadian and BMO MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mackenzie Canadian and BMO MSCI
The main advantage of trading using opposite Mackenzie Canadian and BMO MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mackenzie Canadian position performs unexpectedly, BMO MSCI 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 MSCI will offset losses from the drop in BMO MSCI's long position.| Mackenzie Canadian vs. Mackenzie Large Cap | Mackenzie Canadian vs. Goldman Sachs ActiveBeta | Mackenzie Canadian vs. BMO MSCI EAFE | Mackenzie Canadian vs. BMO Long Federal |
| BMO MSCI vs. Mackenzie Canadian Equity | BMO MSCI vs. BMO MSCI Emerging | BMO MSCI vs. Mackenzie Large Cap | BMO MSCI vs. BMO Long Federal |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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