Correlation Between BMO Balanced and BMO MSCI
Can any of the company-specific risk be diversified away by investing in both BMO Balanced and BMO MSCI 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 Balanced and BMO MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Balanced ETF and BMO MSCI Global, you can compare the effects of market volatilities on BMO Balanced and BMO MSCI 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 Balanced with a short position of BMO MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Balanced and BMO MSCI.
Diversification Opportunities for BMO Balanced and BMO MSCI
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BMO and BMO is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding BMO Balanced ETF and BMO MSCI Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO MSCI Global and BMO Balanced 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 Balanced ETF are associated (or correlated) with BMO MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO MSCI Global has no effect on the direction of BMO Balanced i.e., BMO Balanced and BMO MSCI go up and down completely randomly.
Pair Corralation between BMO Balanced and BMO MSCI
Assuming the 90 days trading horizon BMO Balanced is expected to generate 1.36 times less return on investment than BMO MSCI. But when comparing it to its historical volatility, BMO Balanced ETF is 1.81 times less risky than BMO MSCI. It trades about 0.44 of its potential returns per unit of risk. BMO MSCI Global is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 4,822 in BMO MSCI Global on September 4, 2024 and sell it today you would earn a total of 246.00 from holding BMO MSCI Global or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Balanced ETF vs. BMO MSCI Global
Performance |
| Timeline |
| BMO Balanced ETF |
| BMO MSCI Global |
BMO Balanced and BMO MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Balanced and BMO MSCI
The main advantage of trading using opposite BMO Balanced and BMO MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Balanced position performs unexpectedly, BMO MSCI 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 BMO MSCI will offset losses from the drop in BMO MSCI's long position.| BMO Balanced vs. Vanguard Growth Portfolio | BMO Balanced vs. Vanguard Conservative ETF | BMO Balanced vs. iShares Core Balanced | BMO Balanced vs. Vanguard All Equity ETF |
| BMO MSCI vs. First Asset Energy | BMO MSCI vs. First Asset Tech | BMO MSCI vs. Harvest Equal Weight | BMO MSCI 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |