Correlation Between BMO Premium and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both BMO Premium 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 Premium 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 Premium Yield and iShares MSCI Europe, you can compare the effects of market volatilities on BMO Premium 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 Premium with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Premium and IShares MSCI.
Diversification Opportunities for BMO Premium and IShares MSCI
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and IShares is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding BMO Premium Yield 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 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 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 Premium i.e., BMO Premium and IShares MSCI go up and down completely randomly.
Pair Corralation between BMO Premium and IShares MSCI
Assuming the 90 days trading horizon BMO Premium Yield is expected to generate 0.69 times more return on investment than IShares MSCI. However, BMO Premium Yield is 1.44 times less risky than IShares MSCI. It trades about 0.11 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 2,534 in BMO Premium Yield on August 30, 2024 and sell it today you would earn a total of 739.00 from holding BMO Premium Yield or generate 29.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Premium Yield vs. iShares MSCI Europe
Performance |
| Timeline |
| BMO Premium Yield |
| iShares MSCI Europe |
BMO Premium and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Premium and IShares MSCI
The main advantage of trading using opposite BMO Premium and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Premium 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 Premium vs. iShares SPTSX 60 | BMO Premium vs. iShares Core SP | BMO Premium vs. iShares Core SPTSX | BMO Premium vs. BMO Aggregate Bond |
| 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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