Correlation Between Manulife Smart and BMO Dividend
Can any of the company-specific risk be diversified away by investing in both Manulife Smart and BMO Dividend 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 Manulife Smart and BMO Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manulife Smart Dividend and BMO Dividend ETF, you can compare the effects of market volatilities on Manulife Smart and BMO Dividend 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 Manulife Smart with a short position of BMO Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Smart and BMO Dividend.
Diversification Opportunities for Manulife Smart and BMO Dividend
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Manulife and BMO is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Smart Dividend and BMO Dividend ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Dividend ETF and Manulife Smart 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 Manulife Smart Dividend are associated (or correlated) with BMO Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Dividend ETF has no effect on the direction of Manulife Smart i.e., Manulife Smart and BMO Dividend go up and down completely randomly.
Pair Corralation between Manulife Smart and BMO Dividend
Assuming the 90 days trading horizon Manulife Smart is expected to generate 1.61 times less return on investment than BMO Dividend. In addition to that, Manulife Smart is 1.44 times more volatile than BMO Dividend ETF. It trades about 0.04 of its total potential returns per unit of risk. BMO Dividend ETF is currently generating about 0.1 per unit of volatility. If you would invest 3,531 in BMO Dividend ETF on September 13, 2024 and sell it today you would earn a total of 1,135 from holding BMO Dividend ETF or generate 32.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manulife Smart Dividend vs. BMO Dividend ETF
Performance |
| Timeline |
| Manulife Smart Dividend |
| BMO Dividend ETF |
Manulife Smart and BMO Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Smart and BMO Dividend
The main advantage of trading using opposite Manulife Smart and BMO Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Smart position performs unexpectedly, BMO Dividend 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 Dividend will offset losses from the drop in BMO Dividend's long position.| Manulife Smart vs. Vanguard Dividend Appreciation | Manulife Smart vs. Vanguard Total Market | Manulife Smart vs. Vanguard FTSE Developed | Manulife Smart vs. Vanguard FTSE Developed |
| BMO Dividend vs. Vanguard Dividend Appreciation | BMO Dividend vs. Vanguard Total Market | BMO Dividend vs. Vanguard FTSE Developed | BMO Dividend vs. Vanguard FTSE Developed |
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.
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