Correlation Between Global X and BMO Clean
Can any of the company-specific risk be diversified away by investing in both Global X and BMO Clean 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 Global X and BMO Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X SP and BMO Clean Energy, you can compare the effects of market volatilities on Global X and BMO Clean 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 Global X with a short position of BMO Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and BMO Clean.
Diversification Opportunities for Global X and BMO Clean
Very good diversification
The 3 months correlation between Global and BMO is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Global X SP and BMO Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Clean Energy and Global X 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 Global X SP are associated (or correlated) with BMO Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Clean Energy has no effect on the direction of Global X i.e., Global X and BMO Clean go up and down completely randomly.
Pair Corralation between Global X and BMO Clean
Assuming the 90 days trading horizon Global X SP is expected to generate 0.48 times more return on investment than BMO Clean. However, Global X SP is 2.07 times less risky than BMO Clean. It trades about 0.12 of its potential returns per unit of risk. BMO Clean Energy is currently generating about -0.04 per unit of risk. If you would invest 1,192 in Global X SP on November 3, 2024 and sell it today you would earn a total of 235.00 from holding Global X SP or generate 19.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X SP vs. BMO Clean Energy
Performance |
| Timeline |
| Global X SP |
| BMO Clean Energy |
Global X and BMO Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and BMO Clean
The main advantage of trading using opposite Global X and BMO Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, BMO Clean 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 Clean will offset losses from the drop in BMO Clean's long position.| Global X vs. Global X Equal | Global X vs. Global X Enhanced | Global X vs. Global X Gold | Global X vs. Global X Canadian |
| BMO Clean vs. BMO Short Term Bond | BMO Clean vs. BMO Canadian Bank | BMO Clean vs. BMO Aggregate Bond | BMO Clean 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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