Correlation Between BMO Aggregate and IShares Gold
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and IShares Gold 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 BMO Aggregate and IShares Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Aggregate Bond and iShares Gold Bullion, you can compare the effects of market volatilities on BMO Aggregate and IShares Gold 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 BMO Aggregate with a short position of IShares Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and IShares Gold.
Diversification Opportunities for BMO Aggregate and IShares Gold
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and IShares is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and iShares Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Gold Bullion and BMO Aggregate 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 BMO Aggregate Bond are associated (or correlated) with IShares Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Gold Bullion has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and IShares Gold go up and down completely randomly.
Pair Corralation between BMO Aggregate and IShares Gold
Assuming the 90 days trading horizon BMO Aggregate Bond is expected to generate 0.3 times more return on investment than IShares Gold. However, BMO Aggregate Bond is 3.29 times less risky than IShares Gold. It trades about 0.05 of its potential returns per unit of risk. iShares Gold Bullion is currently generating about -0.13 per unit of risk. If you would invest 1,379 in BMO Aggregate Bond on August 28, 2024 and sell it today you would earn a total of 5.00 from holding BMO Aggregate Bond or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Aggregate Bond vs. iShares Gold Bullion
Performance |
| Timeline |
| BMO Aggregate Bond |
| iShares Gold Bullion |
BMO Aggregate and IShares Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and IShares Gold
The main advantage of trading using opposite BMO Aggregate and IShares Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, IShares Gold 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 IShares Gold will offset losses from the drop in IShares Gold's long position.| BMO Aggregate vs. iShares Core MSCI | BMO Aggregate vs. Vanguard FTSE Canada | BMO Aggregate vs. Vanguard Canadian Aggregate | BMO Aggregate vs. iShares Core MSCI |
| IShares Gold vs. Global Atomic Corp | IShares Gold vs. enCore Energy Corp | IShares Gold vs. Fission Uranium Corp | IShares Gold vs. NexGen Energy |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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