Correlation Between BMO Aggregate and Purpose Bitcoin
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Purpose Bitcoin 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 Aggregate and Purpose Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Aggregate Bond and Purpose Bitcoin CAD, you can compare the effects of market volatilities on BMO Aggregate and Purpose Bitcoin 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 Purpose Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Purpose Bitcoin.
Diversification Opportunities for BMO Aggregate and Purpose Bitcoin
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BMO and Purpose is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Purpose Bitcoin CAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose Bitcoin CAD 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 Purpose Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose Bitcoin CAD has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Purpose Bitcoin go up and down completely randomly.
Pair Corralation between BMO Aggregate and Purpose Bitcoin
Assuming the 90 days trading horizon BMO Aggregate is expected to generate 50.34 times less return on investment than Purpose Bitcoin. But when comparing it to its historical volatility, BMO Aggregate Bond is 17.48 times less risky than Purpose Bitcoin. It trades about 0.13 of its potential returns per unit of risk. Purpose Bitcoin CAD is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,305 in Purpose Bitcoin CAD on September 1, 2024 and sell it today you would earn a total of 512.00 from holding Purpose Bitcoin CAD or generate 39.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Aggregate Bond vs. Purpose Bitcoin CAD
Performance |
| Timeline |
| BMO Aggregate Bond |
| Purpose Bitcoin CAD |
BMO Aggregate and Purpose Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Purpose Bitcoin
The main advantage of trading using opposite BMO Aggregate and Purpose Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Purpose Bitcoin 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 Purpose Bitcoin will offset losses from the drop in Purpose Bitcoin'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 |
| Purpose Bitcoin vs. 3iQ Bitcoin ETF | Purpose Bitcoin vs. 3iQ CoinShares Ether | Purpose Bitcoin vs. Forstrong Global Income | Purpose Bitcoin vs. BMO Aggregate Bond |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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