Correlation Between BMO Premium and BetaPro Natural
Can any of the company-specific risk be diversified away by investing in both BMO Premium and BetaPro Natural 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 Premium and BetaPro Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Premium Yield and BetaPro Natural Gas, you can compare the effects of market volatilities on BMO Premium and BetaPro Natural 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 Premium with a short position of BetaPro Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Premium and BetaPro Natural.
Diversification Opportunities for BMO Premium and BetaPro Natural
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BMO and BetaPro is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding BMO Premium Yield and BetaPro Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Natural Gas and BMO Premium 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 Premium Yield are associated (or correlated) with BetaPro Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Natural Gas has no effect on the direction of BMO Premium i.e., BMO Premium and BetaPro Natural go up and down completely randomly.
Pair Corralation between BMO Premium and BetaPro Natural
Assuming the 90 days trading horizon BMO Premium is expected to generate 2.94 times less return on investment than BetaPro Natural. But when comparing it to its historical volatility, BMO Premium Yield is 17.22 times less risky than BetaPro Natural. It trades about 0.14 of its potential returns per unit of risk. BetaPro Natural Gas is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,624 in BetaPro Natural Gas on November 2, 2024 and sell it today you would lose (547.00) from holding BetaPro Natural Gas or give up 33.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Premium Yield vs. BetaPro Natural Gas
Performance |
| Timeline |
| BMO Premium Yield |
| BetaPro Natural Gas |
BMO Premium and BetaPro Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Premium and BetaPro Natural
The main advantage of trading using opposite BMO Premium and BetaPro Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Premium position performs unexpectedly, BetaPro Natural 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 BetaPro Natural will offset losses from the drop in BetaPro Natural's long position.| BMO Premium vs. BMO Europe High | BMO Premium vs. BMO Tactical Dividend | BMO Premium vs. BMO Europe High | BMO Premium vs. BMO Global High |
| BetaPro Natural vs. BetaPro Natural Gas | BetaPro Natural vs. BetaPro Crude Oil | BetaPro Natural vs. BetaPro Canadian Gold | BetaPro Natural vs. BetaPro Crude Oil |
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.
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