Correlation Between BMO International and BMO Dividend
Can any of the company-specific risk be diversified away by investing in both BMO International and BMO Dividend 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 International and BMO Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO International Dividend and BMO Dividend ETF, you can compare the effects of market volatilities on BMO International and BMO Dividend 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 International with a short position of BMO Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO International and BMO Dividend.
Diversification Opportunities for BMO International and BMO Dividend
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and BMO is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding BMO International Dividend and BMO Dividend ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Dividend ETF and BMO International 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 International Dividend are associated (or correlated) with BMO Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Dividend ETF has no effect on the direction of BMO International i.e., BMO International and BMO Dividend go up and down completely randomly.
Pair Corralation between BMO International and BMO Dividend
Assuming the 90 days trading horizon BMO International Dividend is expected to under-perform the BMO Dividend. But the etf apears to be less risky and, when comparing its historical volatility, BMO International Dividend is 1.04 times less risky than BMO Dividend. The etf trades about -0.23 of its potential returns per unit of risk. The BMO Dividend ETF is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,554 in BMO Dividend ETF on August 25, 2024 and sell it today you would earn a total of 122.00 from holding BMO Dividend ETF or generate 2.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO International Dividend vs. BMO Dividend ETF
Performance |
| Timeline |
| BMO International |
| BMO Dividend ETF |
BMO International and BMO Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO International and BMO Dividend
The main advantage of trading using opposite BMO International and BMO Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO International position performs unexpectedly, BMO Dividend 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 BMO Dividend will offset losses from the drop in BMO Dividend's long position.| BMO International vs. BMO Dividend ETF | BMO International vs. BMO International Dividend | BMO International vs. BMO High Dividend | BMO International vs. BMO Europe High |
| BMO Dividend vs. BMO International Dividend | BMO Dividend vs. BMO Canadian Dividend | BMO Dividend vs. BMO Low Volatility | BMO Dividend vs. BMO High Dividend |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |