Correlation Between BMO Aggregate and Purpose Fund
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Purpose Fund 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 Purpose Fund 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 Purpose Fund Corp, you can compare the effects of market volatilities on BMO Aggregate and Purpose Fund 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 Purpose Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Purpose Fund.
Diversification Opportunities for BMO Aggregate and Purpose Fund
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and Purpose is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Purpose Fund Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose Fund Corp 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 Purpose Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose Fund Corp has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Purpose Fund go up and down completely randomly.
Pair Corralation between BMO Aggregate and Purpose Fund
Assuming the 90 days trading horizon BMO Aggregate is expected to generate 5.86 times less return on investment than Purpose Fund. But when comparing it to its historical volatility, BMO Aggregate Bond is 5.57 times less risky than Purpose Fund. It trades about 0.03 of its potential returns per unit of risk. Purpose Fund Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,869 in Purpose Fund Corp on August 26, 2024 and sell it today you would earn a total of 246.00 from holding Purpose Fund Corp or generate 13.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 58.67% |
| Values | Daily Returns |
BMO Aggregate Bond vs. Purpose Fund Corp
Performance |
| Timeline |
| BMO Aggregate Bond |
| Purpose Fund Corp |
BMO Aggregate and Purpose Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Purpose Fund
The main advantage of trading using opposite BMO Aggregate and Purpose Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Purpose Fund 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 Purpose Fund will offset losses from the drop in Purpose Fund'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 |
| Purpose Fund vs. Global Atomic Corp | Purpose Fund vs. enCore Energy Corp | Purpose Fund vs. Fission Uranium Corp | Purpose Fund vs. NexGen Energy |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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