Correlation Between BMO Dividend and IShares NASDAQ
Can any of the company-specific risk be diversified away by investing in both BMO Dividend and IShares NASDAQ 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 IShares NASDAQ 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 iShares NASDAQ 100, you can compare the effects of market volatilities on BMO Dividend and IShares NASDAQ 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 IShares NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Dividend and IShares NASDAQ.
Diversification Opportunities for BMO Dividend and IShares NASDAQ
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BMO and IShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding BMO Dividend ETF and iShares NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares NASDAQ 100 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 IShares NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares NASDAQ 100 has no effect on the direction of BMO Dividend i.e., BMO Dividend and IShares NASDAQ go up and down completely randomly.
Pair Corralation between BMO Dividend and IShares NASDAQ
Assuming the 90 days trading horizon BMO Dividend is expected to generate 1.13 times less return on investment than IShares NASDAQ. But when comparing it to its historical volatility, BMO Dividend ETF is 2.0 times less risky than IShares NASDAQ. It trades about 0.16 of its potential returns per unit of risk. iShares NASDAQ 100 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,765 in iShares NASDAQ 100 on September 2, 2024 and sell it today you would earn a total of 1,505 from holding iShares NASDAQ 100 or generate 39.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Dividend ETF vs. iShares NASDAQ 100
Performance |
| Timeline |
| BMO Dividend ETF |
| iShares NASDAQ 100 |
BMO Dividend and IShares NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Dividend and IShares NASDAQ
The main advantage of trading using opposite BMO Dividend and IShares NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Dividend position performs unexpectedly, IShares NASDAQ 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 IShares NASDAQ will offset losses from the drop in IShares NASDAQ'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 |
| IShares NASDAQ vs. iShares Core SP | IShares NASDAQ vs. iShares SPTSX Capped | IShares NASDAQ vs. BMO NASDAQ 100 | IShares NASDAQ vs. Vanguard SP 500 |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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