Correlation Between BMO MSCI and NBI Global
Can any of the company-specific risk be diversified away by investing in both BMO MSCI and NBI Global 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 NBI Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO MSCI Emerging and NBI Global Real, you can compare the effects of market volatilities on BMO MSCI and NBI Global 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 NBI Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO MSCI and NBI Global.
Diversification Opportunities for BMO MSCI and NBI Global
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BMO and NBI is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding BMO MSCI Emerging and NBI Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Global Real 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 Emerging are associated (or correlated) with NBI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Global Real has no effect on the direction of BMO MSCI i.e., BMO MSCI and NBI Global go up and down completely randomly.
Pair Corralation between BMO MSCI and NBI Global
Assuming the 90 days trading horizon BMO MSCI is expected to generate 1.18 times less return on investment than NBI Global. In addition to that, BMO MSCI is 1.2 times more volatile than NBI Global Real. It trades about 0.08 of its total potential returns per unit of risk. NBI Global Real is currently generating about 0.12 per unit of volatility. If you would invest 1,874 in NBI Global Real on September 4, 2024 and sell it today you would earn a total of 436.00 from holding NBI Global Real or generate 23.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO MSCI Emerging vs. NBI Global Real
Performance |
| Timeline |
| BMO MSCI Emerging |
| NBI Global Real |
BMO MSCI and NBI Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO MSCI and NBI Global
The main advantage of trading using opposite BMO MSCI and NBI Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO MSCI position performs unexpectedly, NBI Global 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 NBI Global will offset losses from the drop in NBI Global's long position.| BMO MSCI vs. RBC Quant European | BMO MSCI vs. RBC Quant Canadian | BMO MSCI vs. RBC Quant EAFE | BMO MSCI vs. RBC Quant Dividend |
| NBI Global vs. BMO Equal Weight | NBI Global vs. BMO Low Volatility | NBI Global vs. BMO Equal Weight | NBI Global vs. BMO MSCI Emerging |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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