Correlation Between BMO Dividend and Global X
Can any of the company-specific risk be diversified away by investing in both BMO Dividend 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 Dividend 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 Dividend ETF and Global X NASDAQ 100, you can compare the effects of market volatilities on BMO Dividend 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 Dividend with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Dividend and Global X.
Diversification Opportunities for BMO Dividend and Global X
0.95 | Correlation Coefficient |
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 Dividend ETF and Global X NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X NASDAQ and BMO Dividend 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 Dividend ETF 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 NASDAQ has no effect on the direction of BMO Dividend i.e., BMO Dividend and Global X go up and down completely randomly.
Pair Corralation between BMO Dividend and Global X
Assuming the 90 days trading horizon BMO Dividend ETF is expected to generate 0.51 times more return on investment than Global X. However, BMO Dividend ETF is 1.97 times less risky than Global X. It trades about 0.22 of its potential returns per unit of risk. Global X NASDAQ 100 is currently generating about 0.1 per unit of risk. If you would invest 4,018 in BMO Dividend ETF on September 1, 2024 and sell it today you would earn a total of 712.00 from holding BMO Dividend ETF or generate 17.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
BMO Dividend ETF vs. Global X NASDAQ 100
Performance |
| Timeline |
| BMO Dividend ETF |
| Global X NASDAQ |
BMO Dividend and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Dividend and Global X
The main advantage of trading using opposite BMO Dividend and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Dividend 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 Dividend vs. BMO International Dividend | BMO Dividend vs. BMO Canadian Dividend | BMO Dividend vs. BMO Low Volatility | BMO Dividend vs. BMO High Dividend |
| Global X vs. Global X SP | Global X vs. iShares SPTSX Capped | Global X vs. iShares NASDAQ 100 | Global X vs. Global X SPTSX |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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