Correlation Between BMO SP and Fidelity Global
Can any of the company-specific risk be diversified away by investing in both BMO SP and Fidelity Global 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 Fidelity Global 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 Fidelity Global Monthly, you can compare the effects of market volatilities on BMO SP and Fidelity Global 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 Fidelity Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO SP and Fidelity Global.
Diversification Opportunities for BMO SP and Fidelity Global
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BMO and Fidelity is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding BMO SP 500 and Fidelity Global Monthly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Global Monthly 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 Fidelity Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Global Monthly has no effect on the direction of BMO SP i.e., BMO SP and Fidelity Global go up and down completely randomly.
Pair Corralation between BMO SP and Fidelity Global
Assuming the 90 days trading horizon BMO SP 500 is expected to generate 2.24 times more return on investment than Fidelity Global. However, BMO SP is 2.24 times more volatile than Fidelity Global Monthly. It trades about 0.18 of its potential returns per unit of risk. Fidelity Global Monthly is currently generating about -0.13 per unit of risk. If you would invest 8,873 in BMO SP 500 on August 30, 2024 and sell it today you would earn a total of 331.00 from holding BMO SP 500 or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BMO SP 500 vs. Fidelity Global Monthly
Performance |
| Timeline |
| BMO SP 500 |
| Fidelity Global Monthly |
BMO SP and Fidelity Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO SP and Fidelity Global
The main advantage of trading using opposite BMO SP and Fidelity Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO SP position performs unexpectedly, Fidelity Global 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 Fidelity Global will offset losses from the drop in Fidelity Global's long position.| BMO SP vs. BMO Low Volatility | BMO SP vs. BMO MSCI USA | BMO SP vs. BMO Equal Weight | BMO SP vs. BMO Dividend ETF |
| Fidelity Global vs. Fidelity Canadian Monthly | Fidelity Global vs. Fidelity Dividend for | Fidelity Global vs. Fidelity High Dividend | Fidelity Global vs. Fidelity International High |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |