Correlation Between BMO Growth and Global X
Can any of the company-specific risk be diversified away by investing in both BMO Growth and Global X 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 Growth and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Growth ETF and Global X Conservative, you can compare the effects of market volatilities on BMO Growth and Global X 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 Growth with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Growth and Global X.
Diversification Opportunities for BMO Growth and Global X
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BMO and Global is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding BMO Growth ETF and Global X Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Conservative and BMO Growth 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 Growth ETF are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Conservative has no effect on the direction of BMO Growth i.e., BMO Growth and Global X go up and down completely randomly.
Pair Corralation between BMO Growth and Global X
Assuming the 90 days trading horizon BMO Growth ETF is expected to generate 1.24 times more return on investment than Global X. However, BMO Growth is 1.24 times more volatile than Global X Conservative. It trades about 0.12 of its potential returns per unit of risk. Global X Conservative is currently generating about 0.1 per unit of risk. If you would invest 3,450 in BMO Growth ETF on September 3, 2024 and sell it today you would earn a total of 1,215 from holding BMO Growth ETF or generate 35.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Growth ETF vs. Global X Conservative
Performance |
| Timeline |
| BMO Growth ETF |
| Global X Conservative |
BMO Growth and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Growth and Global X
The main advantage of trading using opposite BMO Growth and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Growth position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| BMO Growth vs. BMO Balanced ETF | BMO Growth vs. BMO Conservative ETF | BMO Growth vs. iShares Core Growth | BMO Growth vs. iShares Core Balanced |
| Global X vs. Global X Balanced | Global X vs. Global X Growth | Global X vs. BMO Conservative ETF | Global X vs. iShares Core Conservative |
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.
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