Correlation Between BMO Long and BMO Long
Can any of the company-specific risk be diversified away by investing in both BMO Long and BMO Long 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 Long and BMO Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Long Provincial and BMO Long Corporate, you can compare the effects of market volatilities on BMO Long and BMO Long 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 Long with a short position of BMO Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Long and BMO Long.
Diversification Opportunities for BMO Long and BMO Long
Almost no diversification
The 3 months correlation between BMO and BMO is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding BMO Long Provincial and BMO Long Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Long Corporate and BMO Long 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 Long Provincial are associated (or correlated) with BMO Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Long Corporate has no effect on the direction of BMO Long i.e., BMO Long and BMO Long go up and down completely randomly.
Pair Corralation between BMO Long and BMO Long
Assuming the 90 days trading horizon BMO Long Provincial is expected to under-perform the BMO Long. In addition to that, BMO Long is 1.22 times more volatile than BMO Long Corporate. It trades about -0.03 of its total potential returns per unit of risk. BMO Long Corporate is currently generating about -0.03 per unit of volatility. If you would invest 1,551 in BMO Long Corporate on October 23, 2024 and sell it today you would lose (5.00) from holding BMO Long Corporate or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Long Provincial vs. BMO Long Corporate
Performance |
| Timeline |
| BMO Long Provincial |
| BMO Long Corporate |
BMO Long and BMO Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Long and BMO Long
The main advantage of trading using opposite BMO Long and BMO Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Long position performs unexpectedly, BMO Long 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 BMO Long will offset losses from the drop in BMO Long's long position.| BMO Long vs. BMO Long Corporate | BMO Long vs. BMO Short Provincial | BMO Long vs. BMO Mid Provincial | BMO Long vs. BMO Mid Corporate |
| BMO Long vs. BMO Mid Corporate | BMO Long vs. BMO Short Corporate | BMO Long vs. BMO High Yield | BMO Long vs. BMO Long Provincial |
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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