Correlation Between BMO Aggregate and Desjardins
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Desjardins 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 Desjardins 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 Desjardins RI Emerging, you can compare the effects of market volatilities on BMO Aggregate and Desjardins 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 Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Desjardins.
Diversification Opportunities for BMO Aggregate and Desjardins
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between BMO and Desjardins is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Desjardins RI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI Emerging 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 Desjardins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins RI Emerging has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Desjardins go up and down completely randomly.
Pair Corralation between BMO Aggregate and Desjardins
Assuming the 90 days trading horizon BMO Aggregate Bond is expected to generate 0.36 times more return on investment than Desjardins. However, BMO Aggregate Bond is 2.75 times less risky than Desjardins. It trades about 0.09 of its potential returns per unit of risk. Desjardins RI Emerging is currently generating about -0.26 per unit of risk. If you would invest 3,014 in BMO Aggregate Bond on August 30, 2024 and sell it today you would earn a total of 15.00 from holding BMO Aggregate Bond or generate 0.5% 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. Desjardins RI Emerging
Performance |
| Timeline |
| BMO Aggregate Bond |
| Desjardins RI Emerging |
BMO Aggregate and Desjardins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Desjardins
The main advantage of trading using opposite BMO Aggregate and Desjardins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Desjardins 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 Desjardins will offset losses from the drop in Desjardins' long position.| BMO Aggregate vs. iShares SPTSX 60 | BMO Aggregate vs. iShares Core SP | BMO Aggregate vs. iShares Core SPTSX | BMO Aggregate vs. BMO Aggregate Bond |
| Desjardins vs. Desjardins American Equity | Desjardins vs. Desjardins RI Canada | Desjardins vs. Desjardins RI Canada | Desjardins vs. Desjardins Canadian Corporate |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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