Correlation Between BMO Aggregate and Ninepoint Energy
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Ninepoint Energy 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 Ninepoint Energy 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 Ninepoint Energy, you can compare the effects of market volatilities on BMO Aggregate and Ninepoint Energy 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 Ninepoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Ninepoint Energy.
Diversification Opportunities for BMO Aggregate and Ninepoint Energy
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and Ninepoint is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Ninepoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ninepoint Energy 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 Ninepoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ninepoint Energy has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Ninepoint Energy go up and down completely randomly.
Pair Corralation between BMO Aggregate and Ninepoint Energy
Assuming the 90 days trading horizon BMO Aggregate is expected to generate 2.3 times less return on investment than Ninepoint Energy. But when comparing it to its historical volatility, BMO Aggregate Bond is 3.65 times less risky than Ninepoint Energy. It trades about 0.06 of its potential returns per unit of risk. Ninepoint Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,105 in Ninepoint Energy on September 4, 2024 and sell it today you would earn a total of 855.00 from holding Ninepoint Energy or generate 20.83% 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. Ninepoint Energy
Performance |
| Timeline |
| BMO Aggregate Bond |
| Ninepoint Energy |
BMO Aggregate and Ninepoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Ninepoint Energy
The main advantage of trading using opposite BMO Aggregate and Ninepoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Ninepoint Energy 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 Ninepoint Energy will offset losses from the drop in Ninepoint Energy'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 |
| Ninepoint Energy vs. First Asset Energy | Ninepoint Energy vs. First Asset Tech | Ninepoint Energy vs. Harvest Equal Weight | Ninepoint Energy vs. CI Canada Lifeco |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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