Correlation Between BMO Emerging and IShares High
Can any of the company-specific risk be diversified away by investing in both BMO Emerging and IShares 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 IShares 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 iShares High Yield, you can compare the effects of market volatilities on BMO Emerging and IShares 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 IShares High. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Emerging and IShares High.
Diversification Opportunities for BMO Emerging and IShares High
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BMO and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BMO Emerging Markets and iShares High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 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 IShares High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares High Yield has no effect on the direction of BMO Emerging i.e., BMO Emerging and IShares High go up and down completely randomly.
Pair Corralation between BMO Emerging and IShares High
Assuming the 90 days trading horizon BMO Emerging is expected to generate 1.12 times less return on investment than IShares High. In addition to that, BMO Emerging is 1.06 times more volatile than iShares High Yield. It trades about 0.06 of its total potential returns per unit of risk. iShares High Yield is currently generating about 0.07 per unit of volatility. If you would invest 1,457 in iShares High Yield on September 3, 2024 and sell it today you would earn a total of 243.00 from holding iShares High Yield or generate 16.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Emerging Markets vs. iShares High Yield
Performance |
| Timeline |
| BMO Emerging Markets |
| iShares High Yield |
BMO Emerging and IShares High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Emerging and IShares High
The main advantage of trading using opposite BMO Emerging and IShares High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Emerging position performs unexpectedly, IShares 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 IShares High will offset losses from the drop in IShares 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 |
| IShares High vs. iShares IG Corporate | IShares High vs. iShares Canadian HYBrid | IShares High vs. iShares Core Canadian | IShares High vs. iShares 1 5 Year |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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