Correlation Between BMO Aggregate and RBC European
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By analyzing existing cross correlation between BMO Aggregate Bond and RBC European Mid Cap, you can compare the effects of market volatilities on BMO Aggregate and RBC European 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 Aggregate with a short position of RBC European. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and RBC European.
Diversification Opportunities for BMO Aggregate and RBC European
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BMO and RBC is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and RBC European Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC European Mid and BMO Aggregate 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 Aggregate Bond are associated (or correlated) with RBC European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC European Mid has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and RBC European go up and down completely randomly.
Pair Corralation between BMO Aggregate and RBC European
Assuming the 90 days trading horizon BMO Aggregate is expected to generate 7.73 times less return on investment than RBC European. But when comparing it to its historical volatility, BMO Aggregate Bond is 2.1 times less risky than RBC European. It trades about 0.0 of its potential returns per unit of risk. RBC European Mid Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,273 in RBC European Mid Cap on August 26, 2024 and sell it today you would earn a total of 44.00 from holding RBC European Mid Cap or generate 3.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.75% |
| Values | Daily Returns |
BMO Aggregate Bond vs. RBC European Mid Cap
Performance |
| Timeline |
| BMO Aggregate Bond |
| RBC European Mid |
BMO Aggregate and RBC European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and RBC European
The main advantage of trading using opposite BMO Aggregate and RBC European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, RBC European 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 RBC European will offset losses from the drop in RBC European's long position.| BMO Aggregate vs. BMO Short Term Bond | BMO Aggregate vs. BMO Canadian Bank | BMO Aggregate vs. BMO Aggregate Bond | BMO Aggregate vs. BMO Balanced ETF |
| RBC European vs. BMO Aggregate Bond | RBC European vs. iShares Canadian HYBrid | RBC European vs. Brompton European Dividend | RBC European vs. Solar Alliance Energy |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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