Correlation Between BMO Short and BMO Short
Can any of the company-specific risk be diversified away by investing in both BMO Short and BMO Short 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 BMO Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Short Term IG and BMO Short Term Bond, you can compare the effects of market volatilities on BMO Short and BMO Short 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 BMO Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Short and BMO Short.
Diversification Opportunities for BMO Short and BMO Short
Weak diversification
The 3 months correlation between BMO and BMO is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding BMO Short Term IG and BMO Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Short Term 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 IG are associated (or correlated) with BMO Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Short Term has no effect on the direction of BMO Short i.e., BMO Short and BMO Short go up and down completely randomly.
Pair Corralation between BMO Short and BMO Short
Assuming the 90 days trading horizon BMO Short Term IG is expected to generate 1.39 times more return on investment than BMO Short. However, BMO Short is 1.39 times more volatile than BMO Short Term Bond. It trades about -0.03 of its potential returns per unit of risk. BMO Short Term Bond is currently generating about -0.06 per unit of risk. If you would invest 1,340 in BMO Short Term IG on August 29, 2024 and sell it today you would lose (2.00) from holding BMO Short Term IG or give up 0.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BMO Short Term IG vs. BMO Short Term Bond
Performance |
| Timeline |
| BMO Short Term |
| BMO Short Term |
BMO Short and BMO Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Short and BMO Short
The main advantage of trading using opposite BMO Short and BMO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Short position performs unexpectedly, BMO Short 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 BMO Short will offset losses from the drop in BMO Short's long position.| BMO Short vs. BMO Mid Term IG | BMO Short vs. BMO Short Provincial | BMO Short vs. BMO Short Federal | BMO Short vs. BMO Floating Rate |
| 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 |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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