Correlation Between BMO Aggregate and CIBC Active
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and CIBC Active 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 CIBC Active 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 CIBC Active Investment, you can compare the effects of market volatilities on BMO Aggregate and CIBC Active 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 CIBC Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and CIBC Active.
Diversification Opportunities for BMO Aggregate and CIBC Active
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BMO and CIBC is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and CIBC Active Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Active Investment 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 CIBC Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Active Investment has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and CIBC Active go up and down completely randomly.
Pair Corralation between BMO Aggregate and CIBC Active
Assuming the 90 days trading horizon BMO Aggregate is expected to generate 10.0 times less return on investment than CIBC Active. But when comparing it to its historical volatility, BMO Aggregate Bond is 1.1 times less risky than CIBC Active. It trades about 0.01 of its potential returns per unit of risk. CIBC Active Investment is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,754 in CIBC Active Investment on August 28, 2024 and sell it today you would earn a total of 252.00 from holding CIBC Active Investment or generate 14.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.93% |
| Values | Daily Returns |
BMO Aggregate Bond vs. CIBC Active Investment
Performance |
| Timeline |
| BMO Aggregate Bond |
| CIBC Active Investment |
BMO Aggregate and CIBC Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and CIBC Active
The main advantage of trading using opposite BMO Aggregate and CIBC Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, CIBC Active 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 CIBC Active will offset losses from the drop in CIBC Active'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 |
| CIBC Active vs. Franklin Global Aggregate | CIBC Active vs. Franklin Large Cap | CIBC Active vs. First Trust Senior | CIBC Active 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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