Correlation Between BMO Aggregate and BetaPro Natural
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and BetaPro Natural 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 Natural 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 Natural Gas, you can compare the effects of market volatilities on BMO Aggregate and BetaPro Natural 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 Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and BetaPro Natural.
Diversification Opportunities for BMO Aggregate and BetaPro Natural
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between BMO and BetaPro is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and BetaPro Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Natural Gas 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 Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Natural Gas has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and BetaPro Natural go up and down completely randomly.
Pair Corralation between BMO Aggregate and BetaPro Natural
Assuming the 90 days trading horizon BMO Aggregate Bond is expected to generate 0.01 times more return on investment than BetaPro Natural. However, BMO Aggregate Bond is 71.34 times less risky than BetaPro Natural. It trades about 0.13 of its potential returns per unit of risk. BetaPro Natural Gas is currently generating about -0.25 per unit of risk. If you would invest 3,015 in BMO Aggregate Bond on September 1, 2024 and sell it today you would earn a total of 21.00 from holding BMO Aggregate Bond or generate 0.7% 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. BetaPro Natural Gas
Performance |
| Timeline |
| BMO Aggregate Bond |
| BetaPro Natural Gas |
BMO Aggregate and BetaPro Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and BetaPro Natural
The main advantage of trading using opposite BMO Aggregate and BetaPro Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, BetaPro Natural 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 Natural will offset losses from the drop in BetaPro Natural'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 Natural vs. BetaPro SPTSX Capped | BetaPro Natural vs. Forstrong Global Income | BetaPro Natural vs. BMO Aggregate Bond | BetaPro Natural 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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