Correlation Between BMO Aggregate and Fidelity LongShort
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Fidelity LongShort 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 LongShort 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 LongShort Alternative, you can compare the effects of market volatilities on BMO Aggregate and Fidelity LongShort 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 LongShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Fidelity LongShort.
Diversification Opportunities for BMO Aggregate and Fidelity LongShort
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and Fidelity is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Fidelity LongShort Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity LongShort 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 LongShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity LongShort has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Fidelity LongShort go up and down completely randomly.
Pair Corralation between BMO Aggregate and Fidelity LongShort
Assuming the 90 days trading horizon BMO Aggregate Bond is expected to under-perform the Fidelity LongShort. But the etf apears to be less risky and, when comparing its historical volatility, BMO Aggregate Bond is 2.11 times less risky than Fidelity LongShort. The etf trades about -0.11 of its potential returns per unit of risk. The Fidelity LongShort Alternative is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,144 in Fidelity LongShort Alternative on August 25, 2024 and sell it today you would earn a total of 30.00 from holding Fidelity LongShort Alternative or generate 2.62% 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. Fidelity LongShort Alternative
Performance |
| Timeline |
| BMO Aggregate Bond |
| Fidelity LongShort |
BMO Aggregate and Fidelity LongShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Fidelity LongShort
The main advantage of trading using opposite BMO Aggregate and Fidelity LongShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Fidelity LongShort 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 LongShort will offset losses from the drop in Fidelity LongShort's long position.| BMO Aggregate vs. Mackenzie Core Plus | BMO Aggregate vs. Mackenzie Unconstrained Bond | BMO Aggregate vs. Mackenzie Floating Rate | BMO Aggregate vs. Mackenzie Canadian Aggregate |
| Fidelity LongShort vs. Fidelity Global Value | Fidelity LongShort vs. Fidelity Momentum ETF | Fidelity LongShort vs. Fidelity Canadian High | Fidelity LongShort vs. Fidelity All in One Balanced |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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