Correlation Between BMO MSCI and RBC Short
Can any of the company-specific risk be diversified away by investing in both BMO MSCI and RBC Short 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 MSCI and RBC Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO MSCI EAFE and RBC Short Term, you can compare the effects of market volatilities on BMO MSCI and RBC Short 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 MSCI with a short position of RBC Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO MSCI and RBC Short.
Diversification Opportunities for BMO MSCI and RBC Short
Excellent diversification
The 3 months correlation between BMO and RBC is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding BMO MSCI EAFE and RBC Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Short Term and BMO MSCI 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 MSCI EAFE are associated (or correlated) with RBC Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Short Term has no effect on the direction of BMO MSCI i.e., BMO MSCI and RBC Short go up and down completely randomly.
Pair Corralation between BMO MSCI and RBC Short
Assuming the 90 days trading horizon BMO MSCI EAFE is expected to generate 1.22 times more return on investment than RBC Short. However, BMO MSCI is 1.22 times more volatile than RBC Short Term. It trades about 0.23 of its potential returns per unit of risk. RBC Short Term is currently generating about -0.04 per unit of risk. If you would invest 3,354 in BMO MSCI EAFE on November 19, 2025 and sell it today you would earn a total of 338.00 from holding BMO MSCI EAFE or generate 10.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO MSCI EAFE vs. RBC Short Term
Performance |
| Timeline |
| BMO MSCI EAFE |
| RBC Short Term |
BMO MSCI and RBC Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO MSCI and RBC Short
The main advantage of trading using opposite BMO MSCI and RBC Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO MSCI position performs unexpectedly, RBC Short 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 RBC Short will offset losses from the drop in RBC Short's long position.| BMO MSCI vs. Vanguard FTSE Developed | BMO MSCI vs. Vanguard FTSE Developed | BMO MSCI vs. Vanguard FTSE Developed | BMO MSCI vs. Vanguard Conservative ETF |
| RBC Short vs. BMO Mid Term IG | RBC Short vs. iShares Canadian Short | RBC Short vs. Global X Canadian | RBC Short vs. NBI Sustainable Canadian |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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