Correlation Between BMO MSCI and CI WisdomTree
Can any of the company-specific risk be diversified away by investing in both BMO MSCI and CI WisdomTree 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 MSCI and CI WisdomTree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO MSCI India and CI WisdomTree Japan, you can compare the effects of market volatilities on BMO MSCI and CI WisdomTree 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 MSCI with a short position of CI WisdomTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO MSCI and CI WisdomTree.
Diversification Opportunities for BMO MSCI and CI WisdomTree
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and JAPN is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding BMO MSCI India and CI WisdomTree Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI WisdomTree Japan and BMO MSCI 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 MSCI India are associated (or correlated) with CI WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI WisdomTree Japan has no effect on the direction of BMO MSCI i.e., BMO MSCI and CI WisdomTree go up and down completely randomly.
Pair Corralation between BMO MSCI and CI WisdomTree
Assuming the 90 days trading horizon BMO MSCI India is expected to under-perform the CI WisdomTree. But the etf apears to be less risky and, when comparing its historical volatility, BMO MSCI India is 1.17 times less risky than CI WisdomTree. The etf trades about -0.01 of its potential returns per unit of risk. The CI WisdomTree Japan is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,800 in CI WisdomTree Japan on August 28, 2024 and sell it today you would earn a total of 114.00 from holding CI WisdomTree Japan or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
BMO MSCI India vs. CI WisdomTree Japan
Performance |
| Timeline |
| BMO MSCI India |
| CI WisdomTree Japan |
BMO MSCI and CI WisdomTree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO MSCI and CI WisdomTree
The main advantage of trading using opposite BMO MSCI and CI WisdomTree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO MSCI position performs unexpectedly, CI WisdomTree 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 WisdomTree will offset losses from the drop in CI WisdomTree's long position.| BMO MSCI vs. BMO MSCI China | BMO MSCI vs. iShares India Index | BMO MSCI vs. BMO MSCI Emerging | BMO MSCI vs. BMO Equal Weight |
| CI WisdomTree vs. NBI High Yield | CI WisdomTree vs. NBI Unconstrained Fixed | CI WisdomTree vs. Mackenzie Developed ex North | CI WisdomTree vs. BMO Short Term Bond |
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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