Correlation Between IShares SPTSX and BMO Mid
Can any of the company-specific risk be diversified away by investing in both IShares SPTSX 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 SPTSX 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 SPTSX 60 and BMO Mid Federal, you can compare the effects of market volatilities on IShares SPTSX 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 SPTSX with a short position of BMO Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and BMO Mid.
Diversification Opportunities for IShares SPTSX and BMO Mid
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and BMO is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX 60 and BMO Mid Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Mid Federal and IShares SPTSX 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 SPTSX 60 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 Federal has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and BMO Mid go up and down completely randomly.
Pair Corralation between IShares SPTSX and BMO Mid
Assuming the 90 days trading horizon iShares SPTSX 60 is expected to generate 1.67 times more return on investment than BMO Mid. However, IShares SPTSX is 1.67 times more volatile than BMO Mid Federal. It trades about 0.28 of its potential returns per unit of risk. BMO Mid Federal is currently generating about -0.1 per unit of risk. If you would invest 3,496 in iShares SPTSX 60 on August 25, 2024 and sell it today you would earn a total of 345.00 from holding iShares SPTSX 60 or generate 9.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SPTSX 60 vs. BMO Mid Federal
Performance |
| Timeline |
| iShares SPTSX 60 |
| BMO Mid Federal |
IShares SPTSX and BMO Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SPTSX and BMO Mid
The main advantage of trading using opposite IShares SPTSX and BMO Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SPTSX 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 SPTSX vs. iShares Core SP | IShares SPTSX vs. iShares Core SPTSX | IShares SPTSX vs. iShares SPTSX Capped | IShares SPTSX vs. iShares SPTSX Capped |
| BMO Mid vs. Mackenzie Core Plus | BMO Mid vs. Mackenzie Unconstrained Bond | BMO Mid vs. Mackenzie Floating Rate | BMO Mid vs. Mackenzie Canadian Aggregate |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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