Correlation Between CHAR Technologies and BMO Aggregate
Can any of the company-specific risk be diversified away by investing in both CHAR Technologies and BMO Aggregate 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 CHAR Technologies and BMO Aggregate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHAR Technologies and BMO Aggregate Bond, you can compare the effects of market volatilities on CHAR Technologies and BMO Aggregate 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 CHAR Technologies with a short position of BMO Aggregate. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHAR Technologies and BMO Aggregate.
Diversification Opportunities for CHAR Technologies and BMO Aggregate
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CHAR and BMO is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding CHAR Technologies and BMO Aggregate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Aggregate Bond and CHAR Technologies 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 CHAR Technologies are associated (or correlated) with BMO Aggregate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Aggregate Bond has no effect on the direction of CHAR Technologies i.e., CHAR Technologies and BMO Aggregate go up and down completely randomly.
Pair Corralation between CHAR Technologies and BMO Aggregate
Assuming the 90 days horizon CHAR Technologies is expected to generate 21.11 times more return on investment than BMO Aggregate. However, CHAR Technologies is 21.11 times more volatile than BMO Aggregate Bond. It trades about 0.16 of its potential returns per unit of risk. BMO Aggregate Bond is currently generating about 0.17 per unit of risk. If you would invest 17.00 in CHAR Technologies on November 18, 2024 and sell it today you would earn a total of 3.00 from holding CHAR Technologies or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHAR Technologies vs. BMO Aggregate Bond
Performance |
| Timeline |
| CHAR Technologies |
| BMO Aggregate Bond |
CHAR Technologies and BMO Aggregate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHAR Technologies and BMO Aggregate
The main advantage of trading using opposite CHAR Technologies and BMO Aggregate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHAR Technologies position performs unexpectedly, BMO Aggregate 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 Aggregate will offset losses from the drop in BMO Aggregate's long position.| CHAR Technologies vs. BluMetric Environmental | CHAR Technologies vs. Clear Blue Technologies | CHAR Technologies vs. Eguana Technologies | CHAR Technologies vs. Thermal Energy International |
| BMO Aggregate vs. BMO Short Term Bond | BMO Aggregate vs. BMO Canadian Bank | BMO Aggregate vs. BMO Aggregate Bond | BMO Aggregate 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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