Correlation Between IShares High and BMO Canadian
Can any of the company-specific risk be diversified away by investing in both IShares High and BMO Canadian 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 High and BMO Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares High Dividend and BMO Canadian High, you can compare the effects of market volatilities on IShares High and BMO Canadian 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 High with a short position of BMO Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares High and BMO Canadian.
Diversification Opportunities for IShares High and BMO Canadian
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and BMO is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding iShares High Dividend and BMO Canadian High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Canadian High and IShares High 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 High Dividend are associated (or correlated) with BMO Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Canadian High has no effect on the direction of IShares High i.e., IShares High and BMO Canadian go up and down completely randomly.
Pair Corralation between IShares High and BMO Canadian
Assuming the 90 days trading horizon iShares High Dividend is expected to generate 1.99 times more return on investment than BMO Canadian. However, IShares High is 1.99 times more volatile than BMO Canadian High. It trades about 0.15 of its potential returns per unit of risk. BMO Canadian High is currently generating about 0.23 per unit of risk. If you would invest 3,297 in iShares High Dividend on November 3, 2024 and sell it today you would earn a total of 98.00 from holding iShares High Dividend or generate 2.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares High Dividend vs. BMO Canadian High
Performance |
| Timeline |
| iShares High Dividend |
| BMO Canadian High |
IShares High and BMO Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares High and BMO Canadian
The main advantage of trading using opposite IShares High and BMO Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares High position performs unexpectedly, BMO Canadian 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 Canadian will offset losses from the drop in BMO Canadian's long position.| IShares High vs. iShares Core MSCI | IShares High vs. iShares High Dividend | IShares High vs. iShares Core MSCI | IShares High vs. iShares Core SP |
| BMO Canadian vs. BMO Short Term Bond | BMO Canadian vs. BMO Canadian Bank | BMO Canadian vs. BMO Aggregate Bond | BMO Canadian 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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