Correlation Between BMO Aggregate and Cogeco Communications
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Cogeco Communications 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 Cogeco Communications 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 Cogeco Communications, you can compare the effects of market volatilities on BMO Aggregate and Cogeco Communications 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 Cogeco Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Cogeco Communications.
Diversification Opportunities for BMO Aggregate and Cogeco Communications
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BMO and Cogeco is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications 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 Cogeco Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogeco Communications has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Cogeco Communications go up and down completely randomly.
Pair Corralation between BMO Aggregate and Cogeco Communications
Assuming the 90 days trading horizon BMO Aggregate Bond is expected to generate 0.17 times more return on investment than Cogeco Communications. However, BMO Aggregate Bond is 6.03 times less risky than Cogeco Communications. It trades about 0.14 of its potential returns per unit of risk. Cogeco Communications is currently generating about -0.36 per unit of risk. If you would invest 2,972 in BMO Aggregate Bond on November 6, 2024 and sell it today you would earn a total of 26.00 from holding BMO Aggregate Bond or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Aggregate Bond vs. Cogeco Communications
Performance |
| Timeline |
| BMO Aggregate Bond |
| Cogeco Communications |
BMO Aggregate and Cogeco Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Cogeco Communications
The main advantage of trading using opposite BMO Aggregate and Cogeco Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Cogeco Communications 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 Cogeco Communications will offset losses from the drop in Cogeco Communications' 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 |
| Cogeco Communications vs. Cogeco Inc | Cogeco Communications vs. Quebecor | Cogeco Communications vs. Transcontinental | Cogeco Communications vs. Stella Jones |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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