Correlation Between BMO Aggregate and Mackenzie Balanced
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Mackenzie Balanced 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 Mackenzie Balanced 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 Mackenzie Balanced Allocation, you can compare the effects of market volatilities on BMO Aggregate and Mackenzie Balanced 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 Mackenzie Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Mackenzie Balanced.
Diversification Opportunities for BMO Aggregate and Mackenzie Balanced
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and Mackenzie is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Mackenzie Balanced Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Balanced 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 Mackenzie Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Balanced has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Mackenzie Balanced go up and down completely randomly.
Pair Corralation between BMO Aggregate and Mackenzie Balanced
Assuming the 90 days trading horizon BMO Aggregate is expected to generate 3.19 times less return on investment than Mackenzie Balanced. But when comparing it to its historical volatility, BMO Aggregate Bond is 1.28 times less risky than Mackenzie Balanced. It trades about 0.04 of its potential returns per unit of risk. Mackenzie Balanced Allocation is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,042 in Mackenzie Balanced Allocation on August 29, 2024 and sell it today you would earn a total of 495.00 from holding Mackenzie Balanced Allocation or generate 24.24% 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. Mackenzie Balanced Allocation
Performance |
| Timeline |
| BMO Aggregate Bond |
| Mackenzie Balanced |
BMO Aggregate and Mackenzie Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Mackenzie Balanced
The main advantage of trading using opposite BMO Aggregate and Mackenzie Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Mackenzie Balanced 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 Mackenzie Balanced will offset losses from the drop in Mackenzie Balanced'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 |
| Mackenzie Balanced vs. iShares Core Growth | Mackenzie Balanced vs. Vanguard Balanced Portfolio | Mackenzie Balanced vs. iShares Core Conservative |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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