Correlation Between BMO Core and Global X
Can any of the company-specific risk be diversified away by investing in both BMO Core 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 Core 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 Core Plus and Global X Active, you can compare the effects of market volatilities on BMO Core 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 Core with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Core and Global X.
Diversification Opportunities for BMO Core and Global X
Almost no diversification
The 3 months correlation between BMO and Global is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding BMO Core Plus and Global X Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Active and BMO Core 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 Core Plus 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 Active has no effect on the direction of BMO Core i.e., BMO Core and Global X go up and down completely randomly.
Pair Corralation between BMO Core and Global X
Assuming the 90 days trading horizon BMO Core Plus is expected to under-perform the Global X. In addition to that, BMO Core is 1.1 times more volatile than Global X Active. It trades about -0.06 of its total potential returns per unit of risk. Global X Active is currently generating about -0.01 per unit of volatility. If you would invest 898.00 in Global X Active on August 25, 2024 and sell it today you would lose (1.00) from holding Global X Active or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Core Plus vs. Global X Active
Performance |
| Timeline |
| BMO Core Plus |
| Global X Active |
BMO Core and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Core and Global X
The main advantage of trading using opposite BMO Core and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Core 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 Core vs. BMO Mid Term IG | BMO Core vs. BMO Sustainable Global | BMO Core vs. BMO Government Bond | BMO Core vs. BMO Mid Corporate |
| Global X vs. BetaPro Gold Bullion | Global X vs. BetaPro SP TSX | Global X vs. BetaPro SPTSX Capped | Global X vs. Global X Active |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |