Correlation Between BMO NASDAQ and IShares India
Can any of the company-specific risk be diversified away by investing in both BMO NASDAQ and IShares India 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 India 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 India Index, you can compare the effects of market volatilities on BMO NASDAQ and IShares India 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 India. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO NASDAQ and IShares India.
Diversification Opportunities for BMO NASDAQ and IShares India
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and IShares is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BMO NASDAQ 100 and iShares India Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares India Index 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 India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares India Index has no effect on the direction of BMO NASDAQ i.e., BMO NASDAQ and IShares India go up and down completely randomly.
Pair Corralation between BMO NASDAQ and IShares India
Assuming the 90 days trading horizon BMO NASDAQ 100 is expected to generate 1.31 times more return on investment than IShares India. However, BMO NASDAQ is 1.31 times more volatile than iShares India Index. It trades about 0.13 of its potential returns per unit of risk. iShares India Index is currently generating about 0.08 per unit of risk. If you would invest 6,630 in BMO NASDAQ 100 on September 4, 2024 and sell it today you would earn a total of 2,993 from holding BMO NASDAQ 100 or generate 45.14% 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 India Index
Performance |
| Timeline |
| BMO NASDAQ 100 |
| iShares India Index |
BMO NASDAQ and IShares India Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO NASDAQ and IShares India
The main advantage of trading using opposite BMO NASDAQ and IShares India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO NASDAQ position performs unexpectedly, IShares India 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 India will offset losses from the drop in IShares India's long position.| BMO NASDAQ vs. Franklin Bissett Corporate | BMO NASDAQ vs. FT AlphaDEX Industrials | BMO NASDAQ vs. Dynamic Active Dividend | BMO NASDAQ vs. BMO Aggregate Bond |
| IShares India vs. BMO Aggregate Bond | IShares India vs. iShares Canadian HYBrid | IShares India vs. Brompton European Dividend | IShares India vs. Solar Alliance 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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