Correlation Between BMO Discount and Mackenzie Canadian
Can any of the company-specific risk be diversified away by investing in both BMO Discount and Mackenzie Canadian 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 Discount and Mackenzie Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Discount Bond and Mackenzie Canadian Aggregate, you can compare the effects of market volatilities on BMO Discount and Mackenzie Canadian 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 Discount with a short position of Mackenzie Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Discount and Mackenzie Canadian.
Diversification Opportunities for BMO Discount and Mackenzie Canadian
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between BMO and Mackenzie is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding BMO Discount Bond and Mackenzie Canadian Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Canadian and BMO Discount 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 Discount Bond are associated (or correlated) with Mackenzie Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Canadian has no effect on the direction of BMO Discount i.e., BMO Discount and Mackenzie Canadian go up and down completely randomly.
Pair Corralation between BMO Discount and Mackenzie Canadian
Assuming the 90 days trading horizon BMO Discount is expected to generate 1.64 times less return on investment than Mackenzie Canadian. But when comparing it to its historical volatility, BMO Discount Bond is 1.07 times less risky than Mackenzie Canadian. It trades about 0.06 of its potential returns per unit of risk. Mackenzie Canadian Aggregate is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9,295 in Mackenzie Canadian Aggregate on August 28, 2024 and sell it today you would earn a total of 72.00 from holding Mackenzie Canadian Aggregate or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Discount Bond vs. Mackenzie Canadian Aggregate
Performance |
| Timeline |
| BMO Discount Bond |
| Mackenzie Canadian |
BMO Discount and Mackenzie Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Discount and Mackenzie Canadian
The main advantage of trading using opposite BMO Discount and Mackenzie Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Discount position performs unexpectedly, Mackenzie Canadian 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 Mackenzie Canadian will offset losses from the drop in Mackenzie Canadian's long position.| BMO Discount vs. Vanguard Canadian Short | BMO Discount vs. BMO Aggregate Bond | BMO Discount vs. BMO Short Corporate | BMO Discount vs. CI 1 5 Year |
| Mackenzie Canadian vs. Mackenzie Core Plus | Mackenzie Canadian vs. Mackenzie Unconstrained Bond | Mackenzie Canadian vs. Mackenzie Floating Rate | Mackenzie Canadian vs. Mackenzie Canadian Short |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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