Correlation Between IShares Canadian and BMO Short
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and BMO Short 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 Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Canadian Short and BMO Short Corporate, you can compare the effects of market volatilities on IShares Canadian and BMO Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and BMO Short.
Diversification Opportunities for IShares Canadian and BMO Short
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and BMO is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Short and BMO Short Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Short Corporate 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 Short are associated (or correlated) with BMO Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Short Corporate has no effect on the direction of IShares Canadian i.e., IShares Canadian and BMO Short go up and down completely randomly.
Pair Corralation between IShares Canadian and BMO Short
Assuming the 90 days trading horizon IShares Canadian is expected to generate 1.24 times less return on investment than BMO Short. But when comparing it to its historical volatility, iShares Canadian Short is 1.15 times less risky than BMO Short. It trades about 0.21 of its potential returns per unit of risk. BMO Short Corporate is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,319 in BMO Short Corporate on August 25, 2024 and sell it today you would earn a total of 59.00 from holding BMO Short Corporate or generate 4.47% 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 Short vs. BMO Short Corporate
Performance |
| Timeline |
| iShares Canadian Short |
| BMO Short Corporate |
IShares Canadian and BMO Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and BMO Short
The main advantage of trading using opposite IShares Canadian and BMO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, BMO Short 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 Short will offset losses from the drop in BMO Short's long position.| IShares Canadian vs. Mackenzie Canadian Aggregate | IShares Canadian vs. Mackenzie Canadian Short | IShares Canadian vs. Mackenzie Core Plus | IShares Canadian vs. Mackenzie Investment Grade |
| BMO Short vs. BMO Long Federal | BMO Short vs. BMO Mid Federal | BMO Short vs. BMO Mid Corporate | BMO Short vs. BMO High Yield |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |