Correlation Between IShares NASDAQ and BMO Clean
Can any of the company-specific risk be diversified away by investing in both IShares NASDAQ and BMO Clean 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 NASDAQ and BMO Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares NASDAQ 100 and BMO Clean Energy, you can compare the effects of market volatilities on IShares NASDAQ and BMO Clean 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 NASDAQ with a short position of BMO Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares NASDAQ and BMO Clean.
Diversification Opportunities for IShares NASDAQ and BMO Clean
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and BMO is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding iShares NASDAQ 100 and BMO Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Clean Energy and IShares NASDAQ 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 NASDAQ 100 are associated (or correlated) with BMO Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Clean Energy has no effect on the direction of IShares NASDAQ i.e., IShares NASDAQ and BMO Clean go up and down completely randomly.
Pair Corralation between IShares NASDAQ and BMO Clean
Assuming the 90 days trading horizon iShares NASDAQ 100 is expected to generate 0.77 times more return on investment than BMO Clean. However, iShares NASDAQ 100 is 1.3 times less risky than BMO Clean. It trades about 0.09 of its potential returns per unit of risk. BMO Clean Energy is currently generating about -0.06 per unit of risk. If you would invest 3,690 in iShares NASDAQ 100 on August 31, 2024 and sell it today you would earn a total of 1,582 from holding iShares NASDAQ 100 or generate 42.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares NASDAQ 100 vs. BMO Clean Energy
Performance |
| Timeline |
| iShares NASDAQ 100 |
| BMO Clean Energy |
IShares NASDAQ and BMO Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares NASDAQ and BMO Clean
The main advantage of trading using opposite IShares NASDAQ and BMO Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares NASDAQ position performs unexpectedly, BMO Clean 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 Clean will offset losses from the drop in BMO Clean's long position.| IShares NASDAQ vs. BMO SP 500 | IShares NASDAQ vs. Vanguard SP 500 | IShares NASDAQ vs. Global X SP | IShares NASDAQ vs. iShares Core SP |
| BMO Clean vs. BMO Short Term Bond | BMO Clean vs. BMO Canadian Bank | BMO Clean vs. BMO Aggregate Bond | BMO Clean 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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