Correlation Between BMO Aggregate and BetaPro Gold
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and BetaPro Gold 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 BetaPro Gold 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 BetaPro Gold Bullion, you can compare the effects of market volatilities on BMO Aggregate and BetaPro Gold 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 BetaPro Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and BetaPro Gold.
Diversification Opportunities for BMO Aggregate and BetaPro Gold
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and BetaPro is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and BetaPro Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Gold Bullion 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 BetaPro Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Gold Bullion has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and BetaPro Gold go up and down completely randomly.
Pair Corralation between BMO Aggregate and BetaPro Gold
Assuming the 90 days trading horizon BMO Aggregate is expected to generate 6.82 times less return on investment than BetaPro Gold. But when comparing it to its historical volatility, BMO Aggregate Bond is 6.34 times less risky than BetaPro Gold. It trades about 0.05 of its potential returns per unit of risk. BetaPro Gold Bullion is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,467 in BetaPro Gold Bullion on September 3, 2024 and sell it today you would earn a total of 262.00 from holding BetaPro Gold Bullion or generate 17.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Aggregate Bond vs. BetaPro Gold Bullion
Performance |
| Timeline |
| BMO Aggregate Bond |
| BetaPro Gold Bullion |
BMO Aggregate and BetaPro Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and BetaPro Gold
The main advantage of trading using opposite BMO Aggregate and BetaPro Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, BetaPro Gold 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 BetaPro Gold will offset losses from the drop in BetaPro Gold'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 |
| BetaPro Gold vs. BetaPro SP TSX | BetaPro Gold vs. BetaPro SP TSX | BetaPro Gold vs. BetaPro SPTSX Capped | BetaPro Gold vs. BetaPro SPTSX 60 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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