Correlation Between BMO SPTSX and IA Clarington
Can any of the company-specific risk be diversified away by investing in both BMO SPTSX and IA Clarington 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 IA Clarington 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 IA Clarington Strategic, you can compare the effects of market volatilities on BMO SPTSX and IA Clarington 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 IA Clarington. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO SPTSX and IA Clarington.
Diversification Opportunities for BMO SPTSX and IA Clarington
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BMO and ISIF is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding BMO SPTSX Capped and IA Clarington Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Clarington Strategic 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 IA Clarington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Clarington Strategic has no effect on the direction of BMO SPTSX i.e., BMO SPTSX and IA Clarington go up and down completely randomly.
Pair Corralation between BMO SPTSX and IA Clarington
Assuming the 90 days trading horizon BMO SPTSX Capped is expected to generate 1.78 times more return on investment than IA Clarington. However, BMO SPTSX is 1.78 times more volatile than IA Clarington Strategic. It trades about 0.27 of its potential returns per unit of risk. IA Clarington Strategic is currently generating about 0.17 per unit of risk. If you would invest 3,108 in BMO SPTSX Capped on August 25, 2024 and sell it today you would earn a total of 303.00 from holding BMO SPTSX Capped or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO SPTSX Capped vs. IA Clarington Strategic
Performance |
| Timeline |
| BMO SPTSX Capped |
| IA Clarington Strategic |
BMO SPTSX and IA Clarington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO SPTSX and IA Clarington
The main advantage of trading using opposite BMO SPTSX and IA Clarington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO SPTSX position performs unexpectedly, IA Clarington 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 IA Clarington will offset losses from the drop in IA Clarington'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 |
| IA Clarington vs. Global Atomic Corp | IA Clarington vs. enCore Energy Corp | IA Clarington vs. Fission Uranium Corp | IA Clarington vs. NexGen Energy |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |