Correlation Between BMO SPTSX and BetaPro Natural
Can any of the company-specific risk be diversified away by investing in both BMO SPTSX and BetaPro Natural 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 SPTSX and BetaPro Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO SPTSX Equal and BetaPro Natural Gas, you can compare the effects of market volatilities on BMO SPTSX and BetaPro Natural 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 SPTSX with a short position of BetaPro Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO SPTSX and BetaPro Natural.
Diversification Opportunities for BMO SPTSX and BetaPro Natural
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BMO and BetaPro is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding BMO SPTSX Equal and BetaPro Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Natural Gas and BMO SPTSX 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 SPTSX Equal are associated (or correlated) with BetaPro Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Natural Gas has no effect on the direction of BMO SPTSX i.e., BMO SPTSX and BetaPro Natural go up and down completely randomly.
Pair Corralation between BMO SPTSX and BetaPro Natural
Assuming the 90 days trading horizon BMO SPTSX Equal is expected to generate 0.09 times more return on investment than BetaPro Natural. However, BMO SPTSX Equal is 11.3 times less risky than BetaPro Natural. It trades about 0.19 of its potential returns per unit of risk. BetaPro Natural Gas is currently generating about 0.0 per unit of risk. If you would invest 2,995 in BMO SPTSX Equal on October 21, 2024 and sell it today you would earn a total of 1,267 from holding BMO SPTSX Equal or generate 42.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO SPTSX Equal vs. BetaPro Natural Gas
Performance |
| Timeline |
| BMO SPTSX Equal |
| BetaPro Natural Gas |
BMO SPTSX and BetaPro Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO SPTSX and BetaPro Natural
The main advantage of trading using opposite BMO SPTSX and BetaPro Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO SPTSX position performs unexpectedly, BetaPro Natural 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 BetaPro Natural will offset losses from the drop in BetaPro Natural's long position.| BMO SPTSX vs. BMO Covered Call | BMO SPTSX vs. BMO Canadian Dividend | BMO SPTSX vs. BMO Covered Call | BMO SPTSX vs. BMO Canadian High |
| BetaPro Natural vs. BetaPro NASDAQ 100 2x | BetaPro Natural vs. BetaPro Canadian Gold | BetaPro Natural vs. BetaPro SP 500 | BetaPro Natural vs. BetaPro Crude Oil |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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