Correlation Between BMO Aggregate and CIBC Global
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and CIBC Global 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 Global 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 Global Growth, you can compare the effects of market volatilities on BMO Aggregate and CIBC Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and CIBC Global.
Diversification Opportunities for BMO Aggregate and CIBC Global
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BMO and CIBC is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and CIBC Global Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Global Growth 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Global Growth has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and CIBC Global go up and down completely randomly.
Pair Corralation between BMO Aggregate and CIBC Global
Assuming the 90 days trading horizon BMO Aggregate is expected to generate 3.94 times less return on investment than CIBC Global. But when comparing it to its historical volatility, BMO Aggregate Bond is 3.35 times less risky than CIBC Global. It trades about 0.16 of its potential returns per unit of risk. CIBC Global Growth is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,029 in CIBC Global Growth on September 13, 2024 and sell it today you would earn a total of 103.00 from holding CIBC Global Growth or generate 3.4% 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. CIBC Global Growth
Performance |
Timeline |
BMO Aggregate Bond |
CIBC Global Growth |
BMO Aggregate and CIBC Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BMO Aggregate and CIBC Global
The main advantage of trading using opposite BMO Aggregate and CIBC Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, CIBC Global 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 Global will offset losses from the drop in CIBC Global'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 Global vs. Guardian i3 Global | CIBC Global vs. CI Global Real | CIBC Global vs. CI Enhanced Short | CIBC Global 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.
Other Complementary Tools
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |