Correlation Between BMO Global and First Trust
Can any of the company-specific risk be diversified away by investing in both BMO Global and First Trust 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 BMO Global and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Global Consumer and First Trust AlphaDEX, you can compare the effects of market volatilities on BMO Global and First Trust 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 BMO Global with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Global and First Trust.
Diversification Opportunities for BMO Global and First Trust
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between BMO and First is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding BMO Global Consumer and First Trust AlphaDEX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust AlphaDEX and BMO Global 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 BMO Global Consumer are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust AlphaDEX has no effect on the direction of BMO Global i.e., BMO Global and First Trust go up and down completely randomly.
Pair Corralation between BMO Global and First Trust
If you would invest 3,859 in First Trust AlphaDEX on September 14, 2024 and sell it today you would earn a total of 277.00 from holding First Trust AlphaDEX or generate 7.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
BMO Global Consumer vs. First Trust AlphaDEX
Performance |
| Timeline |
| BMO Global Consumer |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Trust AlphaDEX |
BMO Global and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Global and First Trust
The main advantage of trading using opposite BMO Global and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Global position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| BMO Global vs. BMO Global Consumer | BMO Global vs. iShares SPTSX Capped | BMO Global vs. BMO Global Infrastructure | BMO Global vs. BMO SPTSX Equal |
| First Trust vs. First Trust AlphaDEX | First Trust vs. FT AlphaDEX Industrials | First Trust vs. BMO Equal Weight | First Trust vs. iShares Global Healthcare |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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