Correlation Between BMO SPTSX and BetaPro SP
Can any of the company-specific risk be diversified away by investing in both BMO SPTSX and BetaPro SP 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 BetaPro SP 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 BetaPro SP 500, you can compare the effects of market volatilities on BMO SPTSX and BetaPro SP 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 BetaPro SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO SPTSX and BetaPro SP.
Diversification Opportunities for BMO SPTSX and BetaPro SP
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BMO and BetaPro is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding BMO SPTSX Capped and BetaPro SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro SP 500 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 BetaPro SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro SP 500 has no effect on the direction of BMO SPTSX i.e., BMO SPTSX and BetaPro SP go up and down completely randomly.
Pair Corralation between BMO SPTSX and BetaPro SP
Assuming the 90 days trading horizon BMO SPTSX Capped is expected to generate 0.2 times more return on investment than BetaPro SP. However, BMO SPTSX Capped is 4.98 times less risky than BetaPro SP. It trades about 0.15 of its potential returns per unit of risk. BetaPro SP 500 is currently generating about 0.01 per unit of risk. If you would invest 3,351 in BMO SPTSX Capped on November 4, 2024 and sell it today you would earn a total of 71.00 from holding BMO SPTSX Capped or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO SPTSX Capped vs. BetaPro SP 500
Performance |
| Timeline |
| BMO SPTSX Capped |
| BetaPro SP 500 |
BMO SPTSX and BetaPro SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO SPTSX and BetaPro SP
The main advantage of trading using opposite BMO SPTSX and BetaPro SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO SPTSX position performs unexpectedly, BetaPro SP 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 BetaPro SP will offset losses from the drop in BetaPro SP'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 |
| BetaPro SP vs. BetaPro SPTSX 60 | BetaPro SP vs. BetaPro Equal Weight | BetaPro SP vs. BetaPro Gold Bullion | BetaPro SP vs. BetaPro SP 500 |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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