Correlation Between BMO Equal and BMO Junior
Can any of the company-specific risk be diversified away by investing in both BMO Equal and BMO Junior 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 BMO Junior 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 BMO Junior Gold, you can compare the effects of market volatilities on BMO Equal and BMO Junior 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 BMO Junior. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Equal and BMO Junior.
Diversification Opportunities for BMO Equal and BMO Junior
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BMO and BMO is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding BMO Equal Weight and BMO Junior Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Junior Gold 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 BMO Junior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Junior Gold has no effect on the direction of BMO Equal i.e., BMO Equal and BMO Junior go up and down completely randomly.
Pair Corralation between BMO Equal and BMO Junior
Assuming the 90 days trading horizon BMO Equal Weight is expected to under-perform the BMO Junior. But the etf apears to be less risky and, when comparing its historical volatility, BMO Equal Weight is 1.12 times less risky than BMO Junior. The etf trades about -0.16 of its potential returns per unit of risk. The BMO Junior Gold is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 10,223 in BMO Junior Gold on August 30, 2024 and sell it today you would lose (523.00) from holding BMO Junior Gold or give up 5.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Equal Weight vs. BMO Junior Gold
Performance |
| Timeline |
| BMO Equal Weight |
| BMO Junior Gold |
BMO Equal and BMO Junior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Equal and BMO Junior
The main advantage of trading using opposite BMO Equal and BMO Junior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Equal position performs unexpectedly, BMO Junior 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 Junior will offset losses from the drop in BMO Junior's long position.| BMO Equal vs. BMO Junior Gold | BMO Equal vs. BMO SPTSX Equal | BMO Equal vs. BMO Equal Weight | BMO Equal vs. BMO Tactical Dividend |
| BMO Junior vs. iShares SPTSX Capped | BMO Junior vs. iShares SPTSX Capped | BMO Junior vs. iShares SPTSX Capped | BMO Junior vs. iShares SPTSX Capped |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |