Correlation Between CI Canadian and BMO Equal
Can any of the company-specific risk be diversified away by investing in both CI Canadian and BMO Equal 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 CI Canadian and BMO Equal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Canadian REIT and BMO Equal Weight, you can compare the effects of market volatilities on CI Canadian and BMO Equal 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 CI Canadian with a short position of BMO Equal. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Canadian and BMO Equal.
Diversification Opportunities for CI Canadian and BMO Equal
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between RIT and BMO is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding CI Canadian REIT and BMO Equal Weight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Equal Weight and CI 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 CI Canadian REIT are associated (or correlated) with BMO Equal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Equal Weight has no effect on the direction of CI Canadian i.e., CI Canadian and BMO Equal go up and down completely randomly.
Pair Corralation between CI Canadian and BMO Equal
Assuming the 90 days trading horizon CI Canadian is expected to generate 9.25 times less return on investment than BMO Equal. But when comparing it to its historical volatility, CI Canadian REIT is 1.6 times less risky than BMO Equal. It trades about 0.02 of its potential returns per unit of risk. BMO Equal Weight is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,101 in BMO Equal Weight on November 27, 2024 and sell it today you would earn a total of 1,676 from holding BMO Equal Weight or generate 79.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CI Canadian REIT vs. BMO Equal Weight
Performance |
| Timeline |
| CI Canadian REIT |
| BMO Equal Weight |
CI Canadian and BMO Equal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Canadian and BMO Equal
The main advantage of trading using opposite CI Canadian and BMO Equal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Canadian position performs unexpectedly, BMO Equal 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 Equal will offset losses from the drop in BMO Equal's long position.| CI Canadian vs. BMO Equal Weight | CI Canadian vs. Vanguard FTSE Canadian | CI Canadian vs. iShares SPTSX Capped | CI Canadian vs. BMO Equal Weight |
| BMO Equal vs. BMO Short Term Bond | BMO Equal vs. BMO Canadian Bank | BMO Equal vs. BMO Aggregate Bond | BMO Equal vs. BMO Balanced ETF |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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