Correlation Between BMO Laddered and Global X
Can any of the company-specific risk be diversified away by investing in both BMO Laddered and Global X 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 Laddered and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Laddered Preferred and Global X Active, you can compare the effects of market volatilities on BMO Laddered and Global X 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 Laddered with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Laddered and Global X.
Diversification Opportunities for BMO Laddered and Global X
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BMO and Global is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding BMO Laddered Preferred and Global X Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Active and BMO Laddered 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 Laddered Preferred are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Active has no effect on the direction of BMO Laddered i.e., BMO Laddered and Global X go up and down completely randomly.
Pair Corralation between BMO Laddered and Global X
Assuming the 90 days trading horizon BMO Laddered Preferred is expected to generate 1.09 times more return on investment than Global X. However, BMO Laddered is 1.09 times more volatile than Global X Active. It trades about 0.31 of its potential returns per unit of risk. Global X Active is currently generating about 0.25 per unit of risk. If you would invest 1,037 in BMO Laddered Preferred on September 1, 2024 and sell it today you would earn a total of 30.00 from holding BMO Laddered Preferred or generate 2.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
BMO Laddered Preferred vs. Global X Active
Performance |
| Timeline |
| BMO Laddered Preferred |
| Global X Active |
BMO Laddered and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Laddered and Global X
The main advantage of trading using opposite BMO Laddered and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Laddered position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| BMO Laddered vs. iShares SPTSX Canadian | BMO Laddered vs. Global X Active | BMO Laddered vs. BMO Europe High | BMO Laddered vs. BMO Equal Weight |
| Global X vs. BMO Covered Call | Global X vs. Forstrong Global Income | Global X vs. BMO Aggregate Bond | Global X vs. iShares Canadian HYBrid |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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