Correlation Between BMO Short and Accelerate OneChoice
Can any of the company-specific risk be diversified away by investing in both BMO Short and Accelerate OneChoice 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 Short and Accelerate OneChoice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Short Term Bond and Accelerate OneChoice Alternative, you can compare the effects of market volatilities on BMO Short and Accelerate OneChoice 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 Short with a short position of Accelerate OneChoice. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Short and Accelerate OneChoice.
Diversification Opportunities for BMO Short and Accelerate OneChoice
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BMO and Accelerate is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding BMO Short Term Bond and Accelerate OneChoice Alternati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accelerate OneChoice and BMO Short 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 Short Term Bond are associated (or correlated) with Accelerate OneChoice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accelerate OneChoice has no effect on the direction of BMO Short i.e., BMO Short and Accelerate OneChoice go up and down completely randomly.
Pair Corralation between BMO Short and Accelerate OneChoice
Assuming the 90 days trading horizon BMO Short Term Bond is expected to generate 0.24 times more return on investment than Accelerate OneChoice. However, BMO Short Term Bond is 4.12 times less risky than Accelerate OneChoice. It trades about 0.18 of its potential returns per unit of risk. Accelerate OneChoice Alternative is currently generating about 0.03 per unit of risk. If you would invest 4,885 in BMO Short Term Bond on December 1, 2024 and sell it today you would earn a total of 28.00 from holding BMO Short Term Bond or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Short Term Bond vs. Accelerate OneChoice Alternati
Performance |
| Timeline |
| BMO Short Term |
| Accelerate OneChoice |
BMO Short and Accelerate OneChoice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Short and Accelerate OneChoice
The main advantage of trading using opposite BMO Short and Accelerate OneChoice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Short position performs unexpectedly, Accelerate OneChoice 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 Accelerate OneChoice will offset losses from the drop in Accelerate OneChoice's long position.| BMO Short vs. BMO Corporate Bond | BMO Short vs. BMO Government Bond | BMO Short vs. BMO Ultra Short Term | BMO Short vs. BMO Short Term IG |
| Accelerate OneChoice vs. Accelerate Arbitrage | Accelerate OneChoice vs. Accelerate Absolute Return | Accelerate OneChoice vs. NBI High Yield | Accelerate OneChoice vs. NBI Unconstrained Fixed |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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