Correlation Between BMO MSCI and CI Canadian
Can any of the company-specific risk be diversified away by investing in both BMO MSCI and CI Canadian 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 MSCI and CI Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO MSCI China and CI Canadian Banks, you can compare the effects of market volatilities on BMO MSCI and CI Canadian 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 MSCI with a short position of CI Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO MSCI and CI Canadian.
Diversification Opportunities for BMO MSCI and CI Canadian
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and CIC is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding BMO MSCI China and CI Canadian Banks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Canadian Banks and BMO MSCI 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 MSCI China are associated (or correlated) with CI Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Canadian Banks has no effect on the direction of BMO MSCI i.e., BMO MSCI and CI Canadian go up and down completely randomly.
Pair Corralation between BMO MSCI and CI Canadian
Assuming the 90 days trading horizon BMO MSCI China is expected to generate 3.12 times more return on investment than CI Canadian. However, BMO MSCI is 3.12 times more volatile than CI Canadian Banks. It trades about 0.34 of its potential returns per unit of risk. CI Canadian Banks is currently generating about -0.14 per unit of risk. If you would invest 1,453 in BMO MSCI China on December 12, 2024 and sell it today you would earn a total of 484.00 from holding BMO MSCI China or generate 33.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO MSCI China vs. CI Canadian Banks
Performance |
| Timeline |
| BMO MSCI China |
| CI Canadian Banks |
BMO MSCI and CI Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO MSCI and CI Canadian
The main advantage of trading using opposite BMO MSCI and CI Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO MSCI position performs unexpectedly, CI Canadian 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 Canadian will offset losses from the drop in CI Canadian's long position.| BMO MSCI vs. iShares China | ||
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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