Correlation Between BMO Emerging and Mackenzie High
Can any of the company-specific risk be diversified away by investing in both BMO Emerging and Mackenzie High 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 Emerging and Mackenzie High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Emerging Markets and Mackenzie High Yield, you can compare the effects of market volatilities on BMO Emerging and Mackenzie High 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 Emerging with a short position of Mackenzie High. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Emerging and Mackenzie High.
Diversification Opportunities for BMO Emerging and Mackenzie High
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BMO and Mackenzie is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding BMO Emerging Markets and Mackenzie High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie High Yield and BMO Emerging 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 Emerging Markets are associated (or correlated) with Mackenzie High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie High Yield has no effect on the direction of BMO Emerging i.e., BMO Emerging and Mackenzie High go up and down completely randomly.
Pair Corralation between BMO Emerging and Mackenzie High
Assuming the 90 days trading horizon BMO Emerging is expected to generate 2.57 times less return on investment than Mackenzie High. In addition to that, BMO Emerging is 1.25 times more volatile than Mackenzie High Yield. It trades about 0.07 of its total potential returns per unit of risk. Mackenzie High Yield is currently generating about 0.24 per unit of volatility. If you would invest 8,297 in Mackenzie High Yield on September 1, 2024 and sell it today you would earn a total of 142.00 from holding Mackenzie High Yield or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Emerging Markets vs. Mackenzie High Yield
Performance |
| Timeline |
| BMO Emerging Markets |
| Mackenzie High Yield |
BMO Emerging and Mackenzie High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Emerging and Mackenzie High
The main advantage of trading using opposite BMO Emerging and Mackenzie High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Emerging position performs unexpectedly, Mackenzie High 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 Mackenzie High will offset losses from the drop in Mackenzie High's long position.| BMO Emerging vs. BMO High Yield | BMO Emerging vs. BMO Mid Corporate | BMO Emerging vs. BMO Long Corporate | BMO Emerging vs. BMO Short Provincial |
| Mackenzie High vs. Mackenzie Developed ex North | Mackenzie High vs. Mackenzie Global Sustainable | Mackenzie High vs. Mackenzie Aggregate Bond | Mackenzie High vs. Mackenzie Canadian Ultra |
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 Stocks Directory module to find actively traded stocks across global markets.
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