Correlation Between BMO Global and CI Global
Can any of the company-specific risk be diversified away by investing in both BMO Global and CI 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 Global and CI Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Global Infrastructure and CI Global REIT, you can compare the effects of market volatilities on BMO Global and CI 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 Global with a short position of CI Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Global and CI Global.
Diversification Opportunities for BMO Global and CI Global
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and CGRE is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding BMO Global Infrastructure and CI Global REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global REIT and BMO Global 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 Global Infrastructure are associated (or correlated) with CI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Global REIT has no effect on the direction of BMO Global i.e., BMO Global and CI Global go up and down completely randomly.
Pair Corralation between BMO Global and CI Global
Assuming the 90 days trading horizon BMO Global Infrastructure is expected to generate 0.92 times more return on investment than CI Global. However, BMO Global Infrastructure is 1.08 times less risky than CI Global. It trades about 0.36 of its potential returns per unit of risk. CI Global REIT is currently generating about -0.05 per unit of risk. If you would invest 4,879 in BMO Global Infrastructure on August 28, 2024 and sell it today you would earn a total of 539.00 from holding BMO Global Infrastructure or generate 11.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Global Infrastructure vs. CI Global REIT
Performance |
| Timeline |
| BMO Global Infrastructure |
| CI Global REIT |
BMO Global and CI Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Global and CI Global
The main advantage of trading using opposite BMO Global and CI Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Global position performs unexpectedly, CI 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 CI Global will offset losses from the drop in CI Global's long position.| BMO Global vs. BMO Equal Weight | BMO Global vs. BMO Low Volatility | BMO Global vs. BMO Equal Weight | BMO Global vs. BMO MSCI Emerging |
| CI Global vs. iShares SPTSX Capped | CI Global vs. iShares Canadian Select | CI Global vs. iShares SPTSX Capped | CI Global vs. iShares Diversified Monthly |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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