Correlation Between IShares Core and BMO High
Can any of the company-specific risk be diversified away by investing in both IShares Core and BMO High 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 Core and BMO High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core Canadian and BMO High Yield, you can compare the effects of market volatilities on IShares Core and BMO High 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 Core with a short position of BMO High. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and BMO High.
Diversification Opportunities for IShares Core and BMO High
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and BMO is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Canadian and BMO High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO High Yield and IShares Core 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 Core Canadian are associated (or correlated) with BMO High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO High Yield has no effect on the direction of IShares Core i.e., IShares Core and BMO High go up and down completely randomly.
Pair Corralation between IShares Core and BMO High
Assuming the 90 days trading horizon iShares Core Canadian is expected to generate 2.07 times more return on investment than BMO High. However, IShares Core is 2.07 times more volatile than BMO High Yield. It trades about 0.12 of its potential returns per unit of risk. BMO High Yield is currently generating about 0.24 per unit of risk. If you would invest 1,913 in iShares Core Canadian on August 29, 2024 and sell it today you would earn a total of 39.00 from holding iShares Core Canadian or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core Canadian vs. BMO High Yield
Performance |
| Timeline |
| iShares Core Canadian |
| BMO High Yield |
IShares Core and BMO High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and BMO High
The main advantage of trading using opposite IShares Core and BMO High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, BMO High 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 High will offset losses from the drop in BMO High's long position.| IShares Core vs. iShares MSCI Emerging | IShares Core vs. iShares MSCI Global | IShares Core vs. iShares Core Canadian | IShares Core vs. Vanguard Total Market |
| BMO High vs. BMO High Yield | BMO High vs. BMO Preferred Share | BMO High vs. BMO Preferred Share | BMO High vs. BMO Europe High |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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