Correlation Between BMO SP and Mackenzie Canadian
Can any of the company-specific risk be diversified away by investing in both BMO SP and Mackenzie Canadian 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 Mackenzie Canadian 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 Mackenzie Canadian Ultra, you can compare the effects of market volatilities on BMO SP and Mackenzie Canadian 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 Mackenzie Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO SP and Mackenzie Canadian.
Diversification Opportunities for BMO SP and Mackenzie Canadian
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BMO and Mackenzie is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding BMO SP 500 and Mackenzie Canadian Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Canadian Ultra 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 Mackenzie Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Canadian Ultra has no effect on the direction of BMO SP i.e., BMO SP and Mackenzie Canadian go up and down completely randomly.
Pair Corralation between BMO SP and Mackenzie Canadian
Assuming the 90 days trading horizon BMO SP 500 is expected to generate 47.61 times more return on investment than Mackenzie Canadian. However, BMO SP is 47.61 times more volatile than Mackenzie Canadian Ultra. It trades about 0.33 of its potential returns per unit of risk. Mackenzie Canadian Ultra is currently generating about 0.77 per unit of risk. If you would invest 8,679 in BMO SP 500 on September 1, 2024 and sell it today you would earn a total of 573.00 from holding BMO SP 500 or generate 6.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO SP 500 vs. Mackenzie Canadian Ultra
Performance |
| Timeline |
| BMO SP 500 |
| Mackenzie Canadian Ultra |
BMO SP and Mackenzie Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO SP and Mackenzie Canadian
The main advantage of trading using opposite BMO SP and Mackenzie Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO SP position performs unexpectedly, Mackenzie Canadian 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 Mackenzie Canadian will offset losses from the drop in Mackenzie Canadian'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 |
| Mackenzie Canadian vs. Mackenzie Developed ex North | Mackenzie Canadian vs. Mackenzie Global Sustainable | Mackenzie Canadian vs. Mackenzie Aggregate Bond | Mackenzie Canadian vs. Mackenzie TIPS Index |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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