Correlation Between BMO Aggregate and TD Active
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and TD Active 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 TD Active 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 TD Active High, you can compare the effects of market volatilities on BMO Aggregate and TD Active 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 TD Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and TD Active.
Diversification Opportunities for BMO Aggregate and TD Active
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BMO and TUHY is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and TD Active High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Active High 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 TD Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Active High has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and TD Active go up and down completely randomly.
Pair Corralation between BMO Aggregate and TD Active
Assuming the 90 days trading horizon BMO Aggregate is expected to generate 4.57 times less return on investment than TD Active. But when comparing it to its historical volatility, BMO Aggregate Bond is 7.95 times less risky than TD Active. It trades about 0.04 of its potential returns per unit of risk. TD Active High is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,817 in TD Active High on November 2, 2024 and sell it today you would earn a total of 259.00 from holding TD Active High or generate 14.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.57% |
| Values | Daily Returns |
BMO Aggregate Bond vs. TD Active High
Performance |
| Timeline |
| BMO Aggregate Bond |
| TD Active High |
BMO Aggregate and TD Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and TD Active
The main advantage of trading using opposite BMO Aggregate and TD Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, TD Active 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 TD Active will offset losses from the drop in TD Active'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 |
| TD Active vs. TD Active Global | TD Active vs. TD Q Global | TD Active vs. TD Active Global | TD Active vs. TD Active Preferred |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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