Correlation Between BMO Junior and Harvest Equal
Can any of the company-specific risk be diversified away by investing in both BMO Junior and Harvest Equal 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 Junior and Harvest Equal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Junior Gold and Harvest Equal Weight, you can compare the effects of market volatilities on BMO Junior and Harvest Equal 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 Junior with a short position of Harvest Equal. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Junior and Harvest Equal.
Diversification Opportunities for BMO Junior and Harvest Equal
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BMO and Harvest is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding BMO Junior Gold and Harvest Equal Weight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Equal Weight and BMO Junior 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 Junior Gold are associated (or correlated) with Harvest Equal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Equal Weight has no effect on the direction of BMO Junior i.e., BMO Junior and Harvest Equal go up and down completely randomly.
Pair Corralation between BMO Junior and Harvest Equal
Assuming the 90 days trading horizon BMO Junior Gold is expected to generate 2.94 times more return on investment than Harvest Equal. However, BMO Junior is 2.94 times more volatile than Harvest Equal Weight. It trades about 0.07 of its potential returns per unit of risk. Harvest Equal Weight is currently generating about 0.15 per unit of risk. If you would invest 8,145 in BMO Junior Gold on September 1, 2024 and sell it today you would earn a total of 1,469 from holding BMO Junior Gold or generate 18.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
BMO Junior Gold vs. Harvest Equal Weight
Performance |
| Timeline |
| BMO Junior Gold |
| Harvest Equal Weight |
BMO Junior and Harvest Equal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Junior and Harvest Equal
The main advantage of trading using opposite BMO Junior and Harvest Equal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Junior position performs unexpectedly, Harvest Equal 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 Harvest Equal will offset losses from the drop in Harvest Equal's long position.The idea behind BMO Junior Gold and Harvest Equal Weight pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Harvest Equal vs. Harvest Healthcare Leaders | Harvest Equal vs. CI Gold Giants | Harvest Equal vs. BMO Global High | Harvest Equal vs. First Asset Energy |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |