Correlation Between BMO Long and BMO MSCI
Can any of the company-specific risk be diversified away by investing in both BMO Long and BMO MSCI 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 BMO MSCI 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 BMO MSCI EAFE, you can compare the effects of market volatilities on BMO Long and BMO MSCI 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 BMO MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Long and BMO MSCI.
Diversification Opportunities for BMO Long and BMO MSCI
Average diversification
The 3 months correlation between BMO and BMO is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding BMO Long Federal and BMO MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO MSCI EAFE 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 BMO MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO MSCI EAFE has no effect on the direction of BMO Long i.e., BMO Long and BMO MSCI go up and down completely randomly.
Pair Corralation between BMO Long and BMO MSCI
Assuming the 90 days trading horizon BMO Long Federal is expected to generate 1.49 times more return on investment than BMO MSCI. However, BMO Long is 1.49 times more volatile than BMO MSCI EAFE. It trades about 0.08 of its potential returns per unit of risk. BMO MSCI EAFE is currently generating about -0.19 per unit of risk. If you would invest 1,295 in BMO Long Federal on August 29, 2024 and sell it today you would earn a total of 20.00 from holding BMO Long Federal or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Long Federal vs. BMO MSCI EAFE
Performance |
| Timeline |
| BMO Long Federal |
| BMO MSCI EAFE |
BMO Long and BMO MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Long and BMO MSCI
The main advantage of trading using opposite BMO Long and BMO MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Long position performs unexpectedly, BMO MSCI 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 BMO MSCI will offset losses from the drop in BMO MSCI'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 |
| BMO MSCI vs. Mackenzie Canadian Equity | BMO MSCI vs. BMO MSCI Emerging | BMO MSCI vs. Mackenzie Large Cap | BMO MSCI 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |