Correlation Between BMO Aggregate and BetaPro SP
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and BetaPro SP 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 SP 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 SP 500, you can compare the effects of market volatilities on BMO Aggregate and BetaPro SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and BetaPro SP.
Diversification Opportunities for BMO Aggregate and BetaPro SP
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BMO and BetaPro is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and BetaPro SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro SP 500 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro SP 500 has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and BetaPro SP go up and down completely randomly.
Pair Corralation between BMO Aggregate and BetaPro SP
Assuming the 90 days trading horizon BMO Aggregate Bond is expected to generate 0.28 times more return on investment than BetaPro SP. However, BMO Aggregate Bond is 3.62 times less risky than BetaPro SP. It trades about 0.09 of its potential returns per unit of risk. BetaPro SP 500 is currently generating about -0.12 per unit of risk. If you would invest 3,015 in BMO Aggregate Bond on August 31, 2024 and sell it today you would earn a total of 14.00 from holding BMO Aggregate Bond or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Aggregate Bond vs. BetaPro SP 500
Performance |
| Timeline |
| BMO Aggregate Bond |
| BetaPro SP 500 |
BMO Aggregate and BetaPro SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and BetaPro SP
The main advantage of trading using opposite BMO Aggregate and BetaPro SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, BetaPro SP 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 SP will offset losses from the drop in BetaPro SP'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 SP vs. BetaPro SPTSX Capped | BetaPro SP vs. Forstrong Global Income | BetaPro SP vs. BMO Aggregate Bond | BetaPro SP 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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |