Correlation Between BMO Aggregate and IShares High
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and IShares High 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 IShares High 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 iShares High Quality, you can compare the effects of market volatilities on BMO Aggregate and IShares High 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 IShares High. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and IShares High.
Diversification Opportunities for BMO Aggregate and IShares High
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BMO and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and iShares High Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares High Quality 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 IShares High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares High Quality has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and IShares High go up and down completely randomly.
Pair Corralation between BMO Aggregate and IShares High
Assuming the 90 days trading horizon BMO Aggregate is expected to generate 1.16 times less return on investment than IShares High. In addition to that, BMO Aggregate is 1.06 times more volatile than iShares High Quality. It trades about 0.05 of its total potential returns per unit of risk. iShares High Quality is currently generating about 0.06 per unit of volatility. If you would invest 1,886 in iShares High Quality on August 28, 2024 and sell it today you would earn a total of 8.00 from holding iShares High Quality or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Aggregate Bond vs. iShares High Quality
Performance |
| Timeline |
| BMO Aggregate Bond |
| iShares High Quality |
BMO Aggregate and IShares High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and IShares High
The main advantage of trading using opposite BMO Aggregate and IShares High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, IShares High 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 IShares High will offset losses from the drop in IShares High'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 |
| IShares High vs. iShares 1 10Yr Laddered | IShares High vs. iShares Floating Rate | IShares High vs. iShares IG Corporate | IShares High vs. Global X Active |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |