Correlation Between BMO SP and CIBC Qx
Can any of the company-specific risk be diversified away by investing in both BMO SP and CIBC Qx 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 SP and CIBC Qx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO SP 500 and CIBC Qx International, you can compare the effects of market volatilities on BMO SP and CIBC Qx 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 SP with a short position of CIBC Qx. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO SP and CIBC Qx.
Diversification Opportunities for BMO SP and CIBC Qx
Very good diversification
The 3 months correlation between BMO and CIBC is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BMO SP 500 and CIBC Qx International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Qx International and BMO SP 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 SP 500 are associated (or correlated) with CIBC Qx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Qx International has no effect on the direction of BMO SP i.e., BMO SP and CIBC Qx go up and down completely randomly.
Pair Corralation between BMO SP and CIBC Qx
Assuming the 90 days trading horizon BMO SP 500 is expected to under-perform the CIBC Qx. In addition to that, BMO SP is 1.12 times more volatile than CIBC Qx International. It trades about -0.08 of its total potential returns per unit of risk. CIBC Qx International is currently generating about 0.36 per unit of volatility. If you would invest 1,844 in CIBC Qx International on November 27, 2024 and sell it today you would earn a total of 80.00 from holding CIBC Qx International or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO SP 500 vs. CIBC Qx International
Performance |
| Timeline |
| BMO SP 500 |
| CIBC Qx International |
BMO SP and CIBC Qx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO SP and CIBC Qx
The main advantage of trading using opposite BMO SP and CIBC Qx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO SP position performs unexpectedly, CIBC Qx 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 CIBC Qx will offset losses from the drop in CIBC Qx's long position.| BMO SP vs. BMO SPTSX Capped | BMO SP vs. BMO NASDAQ 100 | BMO SP vs. iShares Core SP | BMO SP vs. Vanguard SP 500 |
| CIBC Qx vs. CIBC Core Fixed | CIBC Qx vs. CIBC Canadian Equity | CIBC Qx vs. CIBC Clean Energy | CIBC Qx vs. CIBC Conservative 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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