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 Canadian, 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 0.95. Overlapping area represents the amount of risk that can be diversified away by holding BMO Core Plus and Global X Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Canadian 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 Canadian 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 generate 1.01 times more return on investment than Global X. However, BMO Core is 1.01 times more volatile than Global X Canadian. It trades about 0.04 of its potential returns per unit of risk. Global X Canadian is currently generating about 0.03 per unit of risk. If you would invest 2,604 in BMO Core Plus on August 29, 2024 and sell it today you would earn a total of 206.00 from holding BMO Core Plus or generate 7.91% return on investment 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 Canadian
Performance |
| Timeline |
| BMO Core Plus |
| Global X Canadian |
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. Global X Intl | Global X vs. Global X SP | Global X vs. BMO Discount Bond | Global X vs. Global X 7 10 |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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