Correlation Between BMO Equal and CI Canada
Can any of the company-specific risk be diversified away by investing in both BMO Equal and CI Canada 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 Equal and CI Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Equal Weight and CI Canada Lifeco, you can compare the effects of market volatilities on BMO Equal and CI Canada 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 Equal with a short position of CI Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Equal and CI Canada.
Diversification Opportunities for BMO Equal and CI Canada
Very poor diversification
The 3 months correlation between BMO and FLI is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding BMO Equal Weight and CI Canada Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Canada Lifeco and BMO Equal 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 Equal Weight are associated (or correlated) with CI Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Canada Lifeco has no effect on the direction of BMO Equal i.e., BMO Equal and CI Canada go up and down completely randomly.
Pair Corralation between BMO Equal and CI Canada
Assuming the 90 days trading horizon BMO Equal Weight is expected to generate 1.26 times more return on investment than CI Canada. However, BMO Equal is 1.26 times more volatile than CI Canada Lifeco. It trades about 0.29 of its potential returns per unit of risk. CI Canada Lifeco is currently generating about 0.18 per unit of risk. If you would invest 3,775 in BMO Equal Weight on November 4, 2024 and sell it today you would earn a total of 263.00 from holding BMO Equal Weight or generate 6.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Equal Weight vs. CI Canada Lifeco
Performance |
| Timeline |
| BMO Equal Weight |
| CI Canada Lifeco |
BMO Equal and CI Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Equal and CI Canada
The main advantage of trading using opposite BMO Equal and CI Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Equal position performs unexpectedly, CI Canada 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 CI Canada will offset losses from the drop in CI Canada's long position.| BMO Equal vs. BMO Short Term Bond | BMO Equal vs. BMO Canadian Bank | BMO Equal vs. BMO Aggregate Bond | BMO Equal vs. BMO Balanced ETF |
| CI Canada vs. Hamilton Canadian Bank | CI Canada vs. Hamilton Global Financials | CI Canada vs. Hamilton Enhanced Canadian | CI Canada vs. Hamilton Enhanced Canadian |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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