Correlation Between BMO MSCI and Guardian Canadian
Can any of the company-specific risk be diversified away by investing in both BMO MSCI and Guardian 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 MSCI and Guardian Canadian 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 Guardian Canadian Focused, you can compare the effects of market volatilities on BMO MSCI and Guardian 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 MSCI with a short position of Guardian Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO MSCI and Guardian Canadian.
Diversification Opportunities for BMO MSCI and Guardian Canadian
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and Guardian is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BMO MSCI EAFE and Guardian Canadian Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Canadian Focused 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 Guardian Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Canadian Focused has no effect on the direction of BMO MSCI i.e., BMO MSCI and Guardian Canadian go up and down completely randomly.
Pair Corralation between BMO MSCI and Guardian Canadian
Assuming the 90 days trading horizon BMO MSCI is expected to generate 3.13 times less return on investment than Guardian Canadian. But when comparing it to its historical volatility, BMO MSCI EAFE is 1.19 times less risky than Guardian Canadian. It trades about 0.08 of its potential returns per unit of risk. Guardian Canadian Focused is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,000 in Guardian Canadian Focused on September 5, 2024 and sell it today you would earn a total of 1,035 from holding Guardian Canadian Focused or generate 51.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 49.7% |
| Values | Daily Returns |
BMO MSCI EAFE vs. Guardian Canadian Focused
Performance |
| Timeline |
| BMO MSCI EAFE |
| Guardian Canadian Focused |
BMO MSCI and Guardian Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO MSCI and Guardian Canadian
The main advantage of trading using opposite BMO MSCI and Guardian Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO MSCI position performs unexpectedly, Guardian 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 Guardian Canadian will offset losses from the drop in Guardian Canadian's long position.| BMO MSCI vs. Mackenzie Canadian Equity | BMO MSCI vs. BMO MSCI Emerging | BMO MSCI vs. Mackenzie Large Cap | BMO MSCI vs. BMO Long Federal |
| Guardian Canadian vs. Mackenzie Large Cap | Guardian Canadian vs. Goldman Sachs ActiveBeta | Guardian Canadian vs. BMO MSCI EAFE | Guardian Canadian vs. BMO Long Federal |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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