Correlation Between BMO SPTSX and Harvest Bank
Can any of the company-specific risk be diversified away by investing in both BMO SPTSX and Harvest Bank 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 Harvest Bank 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 Harvest Bank Leaders, you can compare the effects of market volatilities on BMO SPTSX and Harvest Bank 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 Harvest Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO SPTSX and Harvest Bank.
Diversification Opportunities for BMO SPTSX and Harvest Bank
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BMO and Harvest is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BMO SPTSX Equal and Harvest Bank Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Bank Leaders 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 Harvest Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Bank Leaders has no effect on the direction of BMO SPTSX i.e., BMO SPTSX and Harvest Bank go up and down completely randomly.
Pair Corralation between BMO SPTSX and Harvest Bank
Assuming the 90 days trading horizon BMO SPTSX is expected to generate 2.96 times less return on investment than Harvest Bank. But when comparing it to its historical volatility, BMO SPTSX Equal is 4.44 times less risky than Harvest Bank. It trades about 0.33 of its potential returns per unit of risk. Harvest Bank Leaders is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,255 in Harvest Bank Leaders on August 28, 2024 and sell it today you would earn a total of 222.00 from holding Harvest Bank Leaders or generate 17.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO SPTSX Equal vs. Harvest Bank Leaders
Performance |
| Timeline |
| BMO SPTSX Equal |
| Harvest Bank Leaders |
BMO SPTSX and Harvest Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO SPTSX and Harvest Bank
The main advantage of trading using opposite BMO SPTSX and Harvest Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO SPTSX position performs unexpectedly, Harvest Bank 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 Harvest Bank will offset losses from the drop in Harvest Bank'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 |
| Harvest Bank vs. Harvest Brand Leaders | Harvest Bank vs. Harvest Tech Achievers | Harvest Bank vs. Harvest Equal Weight | Harvest Bank vs. Energy Leaders Plus |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |