Correlation Between BMO Aggregate and Desjardins
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Desjardins 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 Desjardins 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 Desjardins RI Active, you can compare the effects of market volatilities on BMO Aggregate and Desjardins 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 Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Desjardins.
Diversification Opportunities for BMO Aggregate and Desjardins
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BMO and Desjardins is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Desjardins RI Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI Active 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 Desjardins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins RI Active has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Desjardins go up and down completely randomly.
Pair Corralation between BMO Aggregate and Desjardins
Assuming the 90 days trading horizon BMO Aggregate Bond is expected to generate 0.86 times more return on investment than Desjardins. However, BMO Aggregate Bond is 1.16 times less risky than Desjardins. It trades about -0.09 of its potential returns per unit of risk. Desjardins RI Active is currently generating about -0.08 per unit of risk. If you would invest 1,379 in BMO Aggregate Bond on August 26, 2024 and sell it today you would lose (8.00) from holding BMO Aggregate Bond or give up 0.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Aggregate Bond vs. Desjardins RI Active
Performance |
| Timeline |
| BMO Aggregate Bond |
| Desjardins RI Active |
BMO Aggregate and Desjardins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Desjardins
The main advantage of trading using opposite BMO Aggregate and Desjardins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Desjardins 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 Desjardins will offset losses from the drop in Desjardins' 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 |
| Desjardins vs. Desjardins RI Canada | Desjardins vs. Desjardins RI USA | Desjardins vs. Desjardins Canadian Preferred | Desjardins vs. Desjardins Canadian Universe |
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.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |