Correlation Between BMO Equal and IShares SPTSX
Can any of the company-specific risk be diversified away by investing in both BMO Equal and IShares SPTSX 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 Equal and IShares SPTSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Equal Weight and iShares SPTSX Capped, you can compare the effects of market volatilities on BMO Equal and IShares SPTSX 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 Equal with a short position of IShares SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Equal and IShares SPTSX.
Diversification Opportunities for BMO Equal and IShares SPTSX
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BMO and IShares is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding BMO Equal Weight and iShares SPTSX Capped in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPTSX Capped and BMO Equal 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 Equal Weight are associated (or correlated) with IShares SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPTSX Capped has no effect on the direction of BMO Equal i.e., BMO Equal and IShares SPTSX go up and down completely randomly.
Pair Corralation between BMO Equal and IShares SPTSX
Assuming the 90 days trading horizon BMO Equal is expected to generate 2.37 times less return on investment than IShares SPTSX. But when comparing it to its historical volatility, BMO Equal Weight is 1.37 times less risky than IShares SPTSX. It trades about 0.03 of its potential returns per unit of risk. iShares SPTSX Capped is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,369 in iShares SPTSX Capped on September 2, 2024 and sell it today you would earn a total of 430.00 from holding iShares SPTSX Capped or generate 31.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Equal Weight vs. iShares SPTSX Capped
Performance |
| Timeline |
| BMO Equal Weight |
| iShares SPTSX Capped |
BMO Equal and IShares SPTSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Equal and IShares SPTSX
The main advantage of trading using opposite BMO Equal and IShares SPTSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Equal position performs unexpectedly, IShares SPTSX 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 SPTSX will offset losses from the drop in IShares SPTSX's long position.| BMO Equal vs. iShares SPTSX Capped | BMO Equal vs. Vanguard FTSE Canadian | BMO Equal vs. BMO Equal Weight | BMO Equal vs. BMO Canadian Dividend |
| IShares SPTSX vs. CI Gold Giants | IShares SPTSX vs. First Asset Tech | IShares SPTSX vs. CI Canada Lifeco | IShares SPTSX vs. Harvest Healthcare Leaders |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Stocks Directory Find actively traded stocks across global markets |