Correlation Between BMO Mid and Franklin Global
Can any of the company-specific risk be diversified away by investing in both BMO Mid and Franklin Global 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 Mid and Franklin Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Mid Corporate and Franklin Global Aggregate, you can compare the effects of market volatilities on BMO Mid and Franklin Global 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 Mid with a short position of Franklin Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Mid and Franklin Global.
Diversification Opportunities for BMO Mid and Franklin Global
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BMO and Franklin is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BMO Mid Corporate and Franklin Global Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Global Aggregate and BMO Mid 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 Mid Corporate are associated (or correlated) with Franklin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Global Aggregate has no effect on the direction of BMO Mid i.e., BMO Mid and Franklin Global go up and down completely randomly.
Pair Corralation between BMO Mid and Franklin Global
Assuming the 90 days trading horizon BMO Mid Corporate is expected to generate 0.87 times more return on investment than Franklin Global. However, BMO Mid Corporate is 1.15 times less risky than Franklin Global. It trades about 0.08 of its potential returns per unit of risk. Franklin Global Aggregate is currently generating about 0.01 per unit of risk. If you would invest 1,522 in BMO Mid Corporate on August 28, 2024 and sell it today you would earn a total of 21.00 from holding BMO Mid Corporate or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Mid Corporate vs. Franklin Global Aggregate
Performance |
| Timeline |
| BMO Mid Corporate |
| Franklin Global Aggregate |
BMO Mid and Franklin Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Mid and Franklin Global
The main advantage of trading using opposite BMO Mid and Franklin Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Mid position performs unexpectedly, Franklin Global 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 Franklin Global will offset losses from the drop in Franklin Global's long position.| BMO Mid vs. BMO Long Corporate | BMO Mid vs. BMO Short Corporate | BMO Mid vs. BMO High Yield | BMO Mid vs. BMO Short Provincial |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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