Correlation Between BMO Long and Guardian Canadian
Can any of the company-specific risk be diversified away by investing in both BMO Long and Guardian Canadian 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 Long and Guardian Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Long Federal and Guardian Canadian Focused, you can compare the effects of market volatilities on BMO Long and Guardian Canadian 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 Long with a short position of Guardian Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Long and Guardian Canadian.
Diversification Opportunities for BMO Long and Guardian Canadian
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and Guardian is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding BMO Long Federal and Guardian Canadian Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Canadian Focused and BMO Long 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 Long Federal are associated (or correlated) with Guardian Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Canadian Focused has no effect on the direction of BMO Long i.e., BMO Long and Guardian Canadian go up and down completely randomly.
Pair Corralation between BMO Long and Guardian Canadian
Assuming the 90 days trading horizon BMO Long is expected to generate 117.58 times less return on investment than Guardian Canadian. In addition to that, BMO Long is 1.14 times more volatile than Guardian Canadian Focused. It trades about 0.0 of its total potential returns per unit of risk. Guardian Canadian Focused is currently generating about 0.32 per unit of volatility. If you would invest 2,635 in Guardian Canadian Focused on September 5, 2024 and sell it today you would earn a total of 400.00 from holding Guardian Canadian Focused or generate 15.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Long Federal vs. Guardian Canadian Focused
Performance |
| Timeline |
| BMO Long Federal |
| Guardian Canadian Focused |
BMO Long and Guardian Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Long and Guardian Canadian
The main advantage of trading using opposite BMO Long and Guardian Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Long position performs unexpectedly, Guardian Canadian 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 Guardian Canadian will offset losses from the drop in Guardian Canadian's long position.| BMO Long vs. iShares MSCI Emerging | BMO Long vs. iShares MSCI Global | BMO Long vs. iShares Core Canadian | BMO Long vs. Vanguard Total Market |
| Guardian Canadian vs. Mackenzie Large Cap | Guardian Canadian vs. Goldman Sachs ActiveBeta | Guardian Canadian vs. BMO MSCI EAFE | Guardian Canadian vs. BMO Long Federal |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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