Correlation Between BMO Equal and CI Investment
Can any of the company-specific risk be diversified away by investing in both BMO Equal and CI Investment 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 Equal and CI Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Equal Weight and CI Investment Grade, you can compare the effects of market volatilities on BMO Equal and CI Investment 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 Equal with a short position of CI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Equal and CI Investment.
Diversification Opportunities for BMO Equal and CI Investment
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and FIG is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding BMO Equal Weight and CI Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Investment Grade and BMO Equal 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 Equal Weight are associated (or correlated) with CI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Investment Grade has no effect on the direction of BMO Equal i.e., BMO Equal and CI Investment go up and down completely randomly.
Pair Corralation between BMO Equal and CI Investment
Assuming the 90 days trading horizon BMO Equal Weight is expected to generate 2.89 times more return on investment than CI Investment. However, BMO Equal is 2.89 times more volatile than CI Investment Grade. It trades about 0.16 of its potential returns per unit of risk. CI Investment Grade is currently generating about 0.18 per unit of risk. If you would invest 7,370 in BMO Equal Weight on September 1, 2024 and sell it today you would earn a total of 284.00 from holding BMO Equal Weight or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BMO Equal Weight vs. CI Investment Grade
Performance |
| Timeline |
| BMO Equal Weight |
| CI Investment Grade |
BMO Equal and CI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Equal and CI Investment
The main advantage of trading using opposite BMO Equal and CI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Equal position performs unexpectedly, CI Investment 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 CI Investment will offset losses from the drop in CI Investment's long position.| BMO Equal vs. iShares SPTSX Capped | BMO Equal vs. BMO Equal Weight | BMO Equal vs. BMO SPTSX Equal | BMO Equal vs. BMO Equal Weight |
| CI Investment vs. CI Enhanced Short | CI Investment vs. Global X Active | CI Investment vs. Mackenzie Unconstrained Bond | CI Investment vs. CI Enhanced Government |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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