Correlation Between IShares Flexible and BMO Aggregate
Can any of the company-specific risk be diversified away by investing in both IShares Flexible and BMO Aggregate 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 IShares Flexible and BMO Aggregate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Flexible Monthly and BMO Aggregate Bond, you can compare the effects of market volatilities on IShares Flexible and BMO Aggregate 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 IShares Flexible with a short position of BMO Aggregate. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Flexible and BMO Aggregate.
Diversification Opportunities for IShares Flexible and BMO Aggregate
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and BMO is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding iShares Flexible Monthly and BMO Aggregate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Aggregate Bond and IShares Flexible 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 iShares Flexible Monthly are associated (or correlated) with BMO Aggregate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Aggregate Bond has no effect on the direction of IShares Flexible i.e., IShares Flexible and BMO Aggregate go up and down completely randomly.
Pair Corralation between IShares Flexible and BMO Aggregate
Assuming the 90 days trading horizon iShares Flexible Monthly is expected to under-perform the BMO Aggregate. But the etf apears to be less risky and, when comparing its historical volatility, iShares Flexible Monthly is 2.19 times less risky than BMO Aggregate. The etf trades about -0.06 of its potential returns per unit of risk. The BMO Aggregate Bond is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,000 in BMO Aggregate Bond on August 26, 2024 and sell it today you would earn a total of 3.00 from holding BMO Aggregate Bond or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 7.54% |
| Values | Daily Returns |
iShares Flexible Monthly vs. BMO Aggregate Bond
Performance |
| Timeline |
| iShares Flexible Monthly |
| BMO Aggregate Bond |
IShares Flexible and BMO Aggregate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Flexible and BMO Aggregate
The main advantage of trading using opposite IShares Flexible and BMO Aggregate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Flexible position performs unexpectedly, BMO Aggregate 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 Aggregate will offset losses from the drop in BMO Aggregate's long position.| IShares Flexible vs. BMO Aggregate Bond | IShares Flexible vs. iShares Canadian HYBrid | IShares Flexible vs. Brompton European Dividend | IShares Flexible vs. Solar Alliance Energy |
| BMO Aggregate vs. BMO Short Term Bond | BMO Aggregate vs. BMO Canadian Bank | BMO Aggregate vs. BMO Aggregate Bond | BMO Aggregate 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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