Correlation Between CI Gold and BMO Short
Can any of the company-specific risk be diversified away by investing in both CI Gold and BMO Short 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 Gold and BMO Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Gold Bullion and BMO Short Term Bond, you can compare the effects of market volatilities on CI Gold and BMO Short 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 Gold with a short position of BMO Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Gold and BMO Short.
Diversification Opportunities for CI Gold and BMO Short
Very weak diversification
The 3 months correlation between VALT and BMO is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding CI Gold Bullion and BMO Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Short Term and CI Gold 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 Gold Bullion are associated (or correlated) with BMO Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Short Term has no effect on the direction of CI Gold i.e., CI Gold and BMO Short go up and down completely randomly.
Pair Corralation between CI Gold and BMO Short
Assuming the 90 days trading horizon CI Gold Bullion is expected to generate 5.05 times more return on investment than BMO Short. However, CI Gold is 5.05 times more volatile than BMO Short Term Bond. It trades about 0.08 of its potential returns per unit of risk. BMO Short Term Bond is currently generating about 0.11 per unit of risk. If you would invest 2,546 in CI Gold Bullion on August 31, 2024 and sell it today you would earn a total of 762.00 from holding CI Gold Bullion or generate 29.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
CI Gold Bullion vs. BMO Short Term Bond
Performance |
| Timeline |
| CI Gold Bullion |
| BMO Short Term |
CI Gold and BMO Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Gold and BMO Short
The main advantage of trading using opposite CI Gold and BMO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Gold position performs unexpectedly, BMO Short 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 Short will offset losses from the drop in BMO Short's long position.| CI Gold vs. NBI High Yield | CI Gold vs. NBI Unconstrained Fixed | CI Gold vs. Mackenzie Developed ex North | CI Gold vs. BMO Short Term Bond |
| BMO Short vs. Vanguard Total Market | BMO Short vs. iShares High Quality | BMO Short vs. iShares 1 10Yr Laddered | BMO Short vs. iShares Canadian HYBrid |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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