Correlation Between BMO NASDAQ and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both BMO NASDAQ and IShares MSCI 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 IShares MSCI 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 iShares MSCI Europe, you can compare the effects of market volatilities on BMO NASDAQ and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO NASDAQ and IShares MSCI.
Diversification Opportunities for BMO NASDAQ and IShares MSCI
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and IShares is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding BMO NASDAQ 100 and iShares MSCI Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Europe 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Europe has no effect on the direction of BMO NASDAQ i.e., BMO NASDAQ and IShares MSCI go up and down completely randomly.
Pair Corralation between BMO NASDAQ and IShares MSCI
Assuming the 90 days trading horizon BMO NASDAQ 100 is expected to generate 1.6 times more return on investment than IShares MSCI. However, BMO NASDAQ is 1.6 times more volatile than iShares MSCI Europe. It trades about 0.12 of its potential returns per unit of risk. iShares MSCI Europe is currently generating about 0.07 per unit of risk. If you would invest 5,079 in BMO NASDAQ 100 on August 30, 2024 and sell it today you would earn a total of 4,341 from holding BMO NASDAQ 100 or generate 85.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO NASDAQ 100 vs. iShares MSCI Europe
Performance |
| Timeline |
| BMO NASDAQ 100 |
| iShares MSCI Europe |
BMO NASDAQ and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO NASDAQ and IShares MSCI
The main advantage of trading using opposite BMO NASDAQ and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO NASDAQ position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI'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 |
| IShares MSCI vs. Vanguard FTSE Developed | IShares MSCI vs. Vanguard FTSE Emerging | IShares MSCI vs. Vanguard FTSE Developed | IShares MSCI vs. Vanguard Dividend Appreciation |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |