Correlation Between BMO SPTSX and Global X
Can any of the company-specific risk be diversified away by investing in both BMO SPTSX and Global X 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 SPTSX and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO SPTSX Capped and Global X Semiconductor, you can compare the effects of market volatilities on BMO SPTSX and Global X 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 SPTSX with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO SPTSX and Global X.
Diversification Opportunities for BMO SPTSX and Global X
Very good diversification
The 3 months correlation between BMO and Global is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding BMO SPTSX Capped and Global X Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Semiconductor and BMO SPTSX 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 SPTSX Capped are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Semiconductor has no effect on the direction of BMO SPTSX i.e., BMO SPTSX and Global X go up and down completely randomly.
Pair Corralation between BMO SPTSX and Global X
Assuming the 90 days trading horizon BMO SPTSX is expected to generate 2.66 times less return on investment than Global X. But when comparing it to its historical volatility, BMO SPTSX Capped is 2.69 times less risky than Global X. It trades about 0.08 of its potential returns per unit of risk. Global X Semiconductor is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,113 in Global X Semiconductor on October 9, 2024 and sell it today you would earn a total of 1,949 from holding Global X Semiconductor or generate 92.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO SPTSX Capped vs. Global X Semiconductor
Performance |
| Timeline |
| BMO SPTSX Capped |
| Global X Semiconductor |
BMO SPTSX and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO SPTSX and Global X
The main advantage of trading using opposite BMO SPTSX and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO SPTSX position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| BMO SPTSX vs. BMO SP 500 | BMO SPTSX vs. Vanguard FTSE Canada | BMO SPTSX vs. Global X SPTSX | BMO SPTSX vs. iShares Core SP |
| Global X vs. Global X Equal | Global X vs. Global X Enhanced | Global X vs. Global X Gold | Global X vs. Global X 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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