Correlation Between BMO Aggregate and Harvest Healthcare
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Harvest Healthcare 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 Harvest Healthcare 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 Harvest Healthcare Leaders, you can compare the effects of market volatilities on BMO Aggregate and Harvest Healthcare 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 Harvest Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Harvest Healthcare.
Diversification Opportunities for BMO Aggregate and Harvest Healthcare
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BMO and Harvest is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Harvest Healthcare Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Healthcare 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 Harvest Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Healthcare has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Harvest Healthcare go up and down completely randomly.
Pair Corralation between BMO Aggregate and Harvest Healthcare
Assuming the 90 days trading horizon BMO Aggregate Bond is expected to generate 0.52 times more return on investment than Harvest Healthcare. However, BMO Aggregate Bond is 1.93 times less risky than Harvest Healthcare. It trades about -0.05 of its potential returns per unit of risk. Harvest Healthcare Leaders is currently generating about -0.07 per unit of risk. If you would invest 1,399 in BMO Aggregate Bond on August 29, 2024 and sell it today you would lose (11.00) from holding BMO Aggregate Bond or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Aggregate Bond vs. Harvest Healthcare Leaders
Performance |
| Timeline |
| BMO Aggregate Bond |
| Harvest Healthcare |
BMO Aggregate and Harvest Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Harvest Healthcare
The main advantage of trading using opposite BMO Aggregate and Harvest Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Harvest Healthcare 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 Harvest Healthcare will offset losses from the drop in Harvest Healthcare'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 |
| Harvest Healthcare vs. iShares SPTSX 60 | Harvest Healthcare vs. iShares Core SP | Harvest Healthcare vs. iShares Core SPTSX | Harvest Healthcare 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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