Correlation Between BMO Aggregate and Fidelity Sustainable
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Fidelity Sustainable 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 Fidelity Sustainable 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 Fidelity Sustainable World, you can compare the effects of market volatilities on BMO Aggregate and Fidelity Sustainable 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 Fidelity Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Fidelity Sustainable.
Diversification Opportunities for BMO Aggregate and Fidelity Sustainable
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and Fidelity is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Fidelity Sustainable World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sustainable 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 Fidelity Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sustainable has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Fidelity Sustainable go up and down completely randomly.
Pair Corralation between BMO Aggregate and Fidelity Sustainable
Assuming the 90 days trading horizon BMO Aggregate is expected to generate 5.63 times less return on investment than Fidelity Sustainable. But when comparing it to its historical volatility, BMO Aggregate Bond is 1.49 times less risky than Fidelity Sustainable. It trades about 0.03 of its potential returns per unit of risk. Fidelity Sustainable World is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,238 in Fidelity Sustainable World on August 29, 2024 and sell it today you would earn a total of 1,545 from holding Fidelity Sustainable World or generate 47.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Aggregate Bond vs. Fidelity Sustainable World
Performance |
| Timeline |
| BMO Aggregate Bond |
| Fidelity Sustainable |
BMO Aggregate and Fidelity Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Fidelity Sustainable
The main advantage of trading using opposite BMO Aggregate and Fidelity Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Fidelity Sustainable 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 Fidelity Sustainable will offset losses from the drop in Fidelity Sustainable'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 |
| Fidelity Sustainable vs. iShares SPTSX 60 | Fidelity Sustainable vs. iShares Core SP | Fidelity Sustainable vs. iShares Core SPTSX | Fidelity Sustainable vs. BMO Aggregate Bond |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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