Correlation Between Vanguard Canadian and BMO Ultra
Can any of the company-specific risk be diversified away by investing in both Vanguard Canadian and BMO Ultra 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 Vanguard Canadian and BMO Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Canadian Government and BMO Ultra Short Term, you can compare the effects of market volatilities on Vanguard Canadian and BMO Ultra 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 Vanguard Canadian with a short position of BMO Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Canadian and BMO Ultra.
Diversification Opportunities for Vanguard Canadian and BMO Ultra
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and BMO is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Canadian Government and BMO Ultra Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Ultra Short and Vanguard 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 Vanguard Canadian Government are associated (or correlated) with BMO Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Ultra Short has no effect on the direction of Vanguard Canadian i.e., Vanguard Canadian and BMO Ultra go up and down completely randomly.
Pair Corralation between Vanguard Canadian and BMO Ultra
Assuming the 90 days trading horizon Vanguard Canadian Government is expected to generate 19.6 times more return on investment than BMO Ultra. However, Vanguard Canadian is 19.6 times more volatile than BMO Ultra Short Term. It trades about 0.16 of its potential returns per unit of risk. BMO Ultra Short Term is currently generating about 0.65 per unit of risk. If you would invest 2,253 in Vanguard Canadian Government on September 1, 2024 and sell it today you would earn a total of 38.00 from holding Vanguard Canadian Government or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vanguard Canadian Government vs. BMO Ultra Short Term
Performance |
| Timeline |
| Vanguard Canadian |
| BMO Ultra Short |
Vanguard Canadian and BMO Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Canadian and BMO Ultra
The main advantage of trading using opposite Vanguard Canadian and BMO Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Canadian position performs unexpectedly, BMO Ultra 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 Ultra will offset losses from the drop in BMO Ultra's long position.| Vanguard Canadian vs. BetaPro Gold Bullion | Vanguard Canadian vs. BetaPro SP TSX | Vanguard Canadian vs. BetaPro SPTSX Capped | Vanguard Canadian vs. Global X Active |
| BMO Ultra vs. BMO Short Corporate | BMO Ultra vs. BMO Short Provincial | BMO Ultra vs. BMO Long Corporate | BMO Ultra vs. BMO Real Return |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |