Correlation Between BMO Aggregate and Harvest Clean
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Harvest Clean 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 Harvest Clean 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 Harvest Clean Energy, you can compare the effects of market volatilities on BMO Aggregate and Harvest Clean 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 Harvest Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Harvest Clean.
Diversification Opportunities for BMO Aggregate and Harvest Clean
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BMO and Harvest is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Harvest Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Clean Energy 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 Harvest Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Clean Energy has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Harvest Clean go up and down completely randomly.
Pair Corralation between BMO Aggregate and Harvest Clean
Assuming the 90 days trading horizon BMO Aggregate Bond is expected to generate 0.26 times more return on investment than Harvest Clean. However, BMO Aggregate Bond is 3.83 times less risky than Harvest Clean. It trades about 0.01 of its potential returns per unit of risk. Harvest Clean Energy is currently generating about -0.06 per unit of risk. If you would invest 3,000 in BMO Aggregate Bond on August 30, 2024 and sell it today you would earn a total of 29.00 from holding BMO Aggregate Bond or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.33% |
| Values | Daily Returns |
BMO Aggregate Bond vs. Harvest Clean Energy
Performance |
| Timeline |
| BMO Aggregate Bond |
| Harvest Clean Energy |
BMO Aggregate and Harvest Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Harvest Clean
The main advantage of trading using opposite BMO Aggregate and Harvest Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Harvest Clean 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 Harvest Clean will offset losses from the drop in Harvest Clean'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 |
| Harvest Clean vs. Harvest Premium Yield | Harvest Clean vs. Harvest Balanced Income | Harvest Clean vs. Harvest Energy Leaders | Harvest Clean vs. Harvest Eli Lilly |
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 CEOs Directory module to screen CEOs from public companies around the world.
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