Correlation Between BMO NASDAQ and Invesco FTSE
Can any of the company-specific risk be diversified away by investing in both BMO NASDAQ and Invesco FTSE 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 Invesco FTSE 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 Invesco FTSE RAFI, you can compare the effects of market volatilities on BMO NASDAQ and Invesco FTSE 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 Invesco FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO NASDAQ and Invesco FTSE.
Diversification Opportunities for BMO NASDAQ and Invesco FTSE
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BMO and Invesco is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding BMO NASDAQ 100 and Invesco FTSE RAFI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco FTSE RAFI 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 Invesco FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco FTSE RAFI has no effect on the direction of BMO NASDAQ i.e., BMO NASDAQ and Invesco FTSE go up and down completely randomly.
Pair Corralation between BMO NASDAQ and Invesco FTSE
If you would invest 14,170 in BMO NASDAQ 100 on August 25, 2024 and sell it today you would earn a total of 356.00 from holding BMO NASDAQ 100 or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 0.0% |
| Values | Daily Returns |
BMO NASDAQ 100 vs. Invesco FTSE RAFI
Performance |
| Timeline |
| BMO NASDAQ 100 |
| Invesco FTSE RAFI |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
BMO NASDAQ and Invesco FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO NASDAQ and Invesco FTSE
The main advantage of trading using opposite BMO NASDAQ and Invesco FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO NASDAQ position performs unexpectedly, Invesco FTSE 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 Invesco FTSE will offset losses from the drop in Invesco FTSE's long position.| BMO NASDAQ vs. BMO SP 500 | BMO NASDAQ vs. Global X SP | BMO NASDAQ vs. BMO SP 500 | BMO NASDAQ vs. Vanguard SP 500 |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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