Correlation Between BMO Long and Rubicon Organics
Can any of the company-specific risk be diversified away by investing in both BMO Long and Rubicon Organics 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 Long and Rubicon Organics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Long Corporate and Rubicon Organics, you can compare the effects of market volatilities on BMO Long and Rubicon Organics 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 Long with a short position of Rubicon Organics. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Long and Rubicon Organics.
Diversification Opportunities for BMO Long and Rubicon Organics
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and Rubicon is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding BMO Long Corporate and Rubicon Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Organics and BMO Long 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 Long Corporate are associated (or correlated) with Rubicon Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Organics has no effect on the direction of BMO Long i.e., BMO Long and Rubicon Organics go up and down completely randomly.
Pair Corralation between BMO Long and Rubicon Organics
Assuming the 90 days trading horizon BMO Long Corporate is expected to generate 0.1 times more return on investment than Rubicon Organics. However, BMO Long Corporate is 9.65 times less risky than Rubicon Organics. It trades about 0.2 of its potential returns per unit of risk. Rubicon Organics is currently generating about 0.01 per unit of risk. If you would invest 1,534 in BMO Long Corporate on September 5, 2024 and sell it today you would earn a total of 48.00 from holding BMO Long Corporate or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Long Corporate vs. Rubicon Organics
Performance |
| Timeline |
| BMO Long Corporate |
| Rubicon Organics |
BMO Long and Rubicon Organics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Long and Rubicon Organics
The main advantage of trading using opposite BMO Long and Rubicon Organics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Long position performs unexpectedly, Rubicon Organics 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 Rubicon Organics will offset losses from the drop in Rubicon Organics' long position.| BMO Long vs. BMO Mid Corporate | BMO Long vs. BMO Short Corporate | BMO Long vs. BMO High Yield | BMO Long vs. BMO Long Provincial |
| Rubicon Organics vs. Gildan Activewear | Rubicon Organics vs. Open Text Corp | Rubicon Organics vs. Waste Connections | Rubicon Organics vs. CCL Industries |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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