Correlation Between BMO Aggregate and Intact Financial
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Intact Financial 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 Intact Financial 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 Intact Financial Corp, you can compare the effects of market volatilities on BMO Aggregate and Intact Financial 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 Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Intact Financial.
Diversification Opportunities for BMO Aggregate and Intact Financial
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and Intact is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Intact Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial Corp 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 Intact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intact Financial Corp has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Intact Financial go up and down completely randomly.
Pair Corralation between BMO Aggregate and Intact Financial
Assuming the 90 days trading horizon BMO Aggregate Bond is expected to under-perform the Intact Financial. But the etf apears to be less risky and, when comparing its historical volatility, BMO Aggregate Bond is 3.19 times less risky than Intact Financial. The etf trades about -0.21 of its potential returns per unit of risk. The Intact Financial Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,417 in Intact Financial Corp on August 25, 2024 and sell it today you would earn a total of 8.00 from holding Intact Financial Corp or generate 0.33% 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. Intact Financial Corp
Performance |
| Timeline |
| BMO Aggregate Bond |
| Intact Financial Corp |
BMO Aggregate and Intact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Intact Financial
The main advantage of trading using opposite BMO Aggregate and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Intact Financial 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 Intact Financial will offset losses from the drop in Intact Financial'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 |
| Intact Financial vs. Forstrong Global Income | Intact Financial vs. BMO Aggregate Bond | Intact Financial vs. Terreno Resources Corp | Intact Financial 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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