Correlation Between IShares Floating and BMO MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Floating and BMO MSCI 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 Floating and BMO MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Floating Rate and BMO MSCI Emerging, you can compare the effects of market volatilities on IShares Floating and BMO MSCI 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 Floating with a short position of BMO MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Floating and BMO MSCI.
Diversification Opportunities for IShares Floating and BMO MSCI
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and BMO is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding iShares Floating Rate and BMO MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO MSCI Emerging and IShares Floating 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 Floating Rate are associated (or correlated) with BMO MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO MSCI Emerging has no effect on the direction of IShares Floating i.e., IShares Floating and BMO MSCI go up and down completely randomly.
Pair Corralation between IShares Floating and BMO MSCI
Assuming the 90 days trading horizon IShares Floating is expected to generate 3.46 times less return on investment than BMO MSCI. But when comparing it to its historical volatility, iShares Floating Rate is 19.43 times less risky than BMO MSCI. It trades about 0.38 of its potential returns per unit of risk. BMO MSCI Emerging is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,963 in BMO MSCI Emerging on August 25, 2024 and sell it today you would earn a total of 225.00 from holding BMO MSCI Emerging or generate 11.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Floating Rate vs. BMO MSCI Emerging
Performance |
| Timeline |
| iShares Floating Rate |
| BMO MSCI Emerging |
IShares Floating and BMO MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Floating and BMO MSCI
The main advantage of trading using opposite IShares Floating and BMO MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Floating position performs unexpectedly, BMO MSCI 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 MSCI will offset losses from the drop in BMO MSCI's long position.| IShares Floating vs. Mackenzie Canadian Aggregate | IShares Floating vs. Mackenzie Canadian Short | IShares Floating vs. Mackenzie Core Plus | IShares Floating vs. Mackenzie Investment Grade |
| BMO MSCI vs. iShares MSCI Min | BMO MSCI vs. iShares MSCI Min | BMO MSCI vs. iShares Floating Rate | BMO MSCI vs. BMO Aggregate Bond |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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