Correlation Between BMO Aggregate and Evolve Active
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Evolve 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 Evolve 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 Evolve Active Canadian, you can compare the effects of market volatilities on BMO Aggregate and Evolve 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 Evolve Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Evolve Active.
Diversification Opportunities for BMO Aggregate and Evolve Active
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between BMO and Evolve is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Evolve Active Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Active Canadian 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 Evolve Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Active Canadian has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Evolve Active go up and down completely randomly.
Pair Corralation between BMO Aggregate and Evolve Active
Assuming the 90 days trading horizon BMO Aggregate is expected to generate 1.38 times less return on investment than Evolve Active. In addition to that, BMO Aggregate is 1.02 times more volatile than Evolve Active Canadian. It trades about 0.13 of its total potential returns per unit of risk. Evolve Active Canadian is currently generating about 0.18 per unit of volatility. If you would invest 1,592 in Evolve Active Canadian on September 1, 2024 and sell it today you would earn a total of 16.00 from holding Evolve Active Canadian or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BMO Aggregate Bond vs. Evolve Active Canadian
Performance |
| Timeline |
| BMO Aggregate Bond |
| Evolve Active Canadian |
BMO Aggregate and Evolve Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Evolve Active
The main advantage of trading using opposite BMO Aggregate and Evolve Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Evolve 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 Evolve Active will offset losses from the drop in Evolve 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 |
| Evolve Active vs. BMO Covered Call | Evolve Active vs. Forstrong Global Income | Evolve Active vs. BMO Aggregate Bond | Evolve Active vs. iShares Canadian HYBrid |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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