Correlation Between BMO Aggregate and Starlight Global
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Starlight Global 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 Starlight Global 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 Starlight Global Real, you can compare the effects of market volatilities on BMO Aggregate and Starlight Global 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 Starlight Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Starlight Global.
Diversification Opportunities for BMO Aggregate and Starlight Global
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BMO and Starlight is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Starlight Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starlight Global Real 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 Starlight Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starlight Global Real has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Starlight Global go up and down completely randomly.
Pair Corralation between BMO Aggregate and Starlight Global
Assuming the 90 days trading horizon BMO Aggregate Bond is expected to generate 1.1 times more return on investment than Starlight Global. However, BMO Aggregate is 1.1 times more volatile than Starlight Global Real. It trades about 0.22 of its potential returns per unit of risk. Starlight Global Real is currently generating about 0.09 per unit of risk. If you would invest 1,378 in BMO Aggregate Bond on September 2, 2024 and sell it today you would earn a total of 27.00 from holding BMO Aggregate Bond or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Aggregate Bond vs. Starlight Global Real
Performance |
| Timeline |
| BMO Aggregate Bond |
| Starlight Global Real |
BMO Aggregate and Starlight Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Starlight Global
The main advantage of trading using opposite BMO Aggregate and Starlight Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Starlight Global 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 Starlight Global will offset losses from the drop in Starlight Global'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 |
| Starlight Global vs. Brompton Global Dividend | Starlight Global vs. Global Healthcare Income | Starlight Global vs. Tech Leaders Income | Starlight Global vs. Brompton North American |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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