Correlation Between BMO NASDAQ and CI Enhanced
Can any of the company-specific risk be diversified away by investing in both BMO NASDAQ and CI Enhanced 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 NASDAQ and CI Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO NASDAQ 100 and CI Enhanced Government, you can compare the effects of market volatilities on BMO NASDAQ and CI Enhanced 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 NASDAQ with a short position of CI Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO NASDAQ and CI Enhanced.
Diversification Opportunities for BMO NASDAQ and CI Enhanced
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BMO and FGO is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding BMO NASDAQ 100 and CI Enhanced Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Enhanced Government and BMO NASDAQ 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 NASDAQ 100 are associated (or correlated) with CI Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Enhanced Government has no effect on the direction of BMO NASDAQ i.e., BMO NASDAQ and CI Enhanced go up and down completely randomly.
Pair Corralation between BMO NASDAQ and CI Enhanced
Assuming the 90 days trading horizon BMO NASDAQ 100 is expected to generate 2.86 times more return on investment than CI Enhanced. However, BMO NASDAQ is 2.86 times more volatile than CI Enhanced Government. It trades about 0.22 of its potential returns per unit of risk. CI Enhanced Government is currently generating about -0.01 per unit of risk. If you would invest 8,679 in BMO NASDAQ 100 on September 3, 2024 and sell it today you would earn a total of 815.00 from holding BMO NASDAQ 100 or generate 9.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO NASDAQ 100 vs. CI Enhanced Government
Performance |
| Timeline |
| BMO NASDAQ 100 |
| CI Enhanced Government |
BMO NASDAQ and CI Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO NASDAQ and CI Enhanced
The main advantage of trading using opposite BMO NASDAQ and CI Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO NASDAQ position performs unexpectedly, CI Enhanced 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 Enhanced will offset losses from the drop in CI Enhanced's long position.| BMO NASDAQ vs. Global X NASDAQ 100 | BMO NASDAQ vs. BMO NASDAQ 100 | BMO NASDAQ vs. BMO SP 500 | BMO NASDAQ vs. BMO MSCI USA |
| CI Enhanced vs. CI Enhanced Short | CI Enhanced vs. CI Investment Grade | CI Enhanced vs. CI Global Financial | CI Enhanced vs. CI Marret Alternative |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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