Correlation Between IShares Canadian and BMO Mid
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and BMO Mid 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 Canadian and BMO Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Canadian Government and BMO Mid Provincial, you can compare the effects of market volatilities on IShares Canadian and BMO Mid 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 Canadian with a short position of BMO Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and BMO Mid.
Diversification Opportunities for IShares Canadian and BMO Mid
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and BMO is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Government and BMO Mid Provincial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Mid Provincial and IShares 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 iShares Canadian Government are associated (or correlated) with BMO Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Mid Provincial has no effect on the direction of IShares Canadian i.e., IShares Canadian and BMO Mid go up and down completely randomly.
Pair Corralation between IShares Canadian and BMO Mid
Assuming the 90 days trading horizon iShares Canadian Government is expected to generate 1.05 times more return on investment than BMO Mid. However, IShares Canadian is 1.05 times more volatile than BMO Mid Provincial. It trades about 0.02 of its potential returns per unit of risk. BMO Mid Provincial is currently generating about 0.01 per unit of risk. If you would invest 1,928 in iShares Canadian Government on August 29, 2024 and sell it today you would earn a total of 9.00 from holding iShares Canadian Government or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian Government vs. BMO Mid Provincial
Performance |
| Timeline |
| iShares Canadian Gov |
| BMO Mid Provincial |
IShares Canadian and BMO Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and BMO Mid
The main advantage of trading using opposite IShares Canadian and BMO Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, BMO Mid 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 Mid will offset losses from the drop in BMO Mid's long position.| IShares Canadian vs. iShares Core Canadian | IShares Canadian vs. iShares Core Canadian | IShares Canadian vs. iShares Canadian Real | IShares Canadian vs. iShares Canadian Value |
| BMO Mid vs. BMO Long Federal | BMO Mid vs. BMO Long Provincial | BMO Mid vs. Wealthsimple Developed Markets | BMO Mid vs. Wealthsimple North America |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |