Correlation Between BMO Aggregate and CI WisdomTree
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and CI WisdomTree 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 CI WisdomTree 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 CI WisdomTree Japan, you can compare the effects of market volatilities on BMO Aggregate and CI WisdomTree 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 CI WisdomTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and CI WisdomTree.
Diversification Opportunities for BMO Aggregate and CI WisdomTree
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BMO and JAPN is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and CI WisdomTree Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI WisdomTree Japan 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 CI WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI WisdomTree Japan has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and CI WisdomTree go up and down completely randomly.
Pair Corralation between BMO Aggregate and CI WisdomTree
Assuming the 90 days trading horizon BMO Aggregate Bond is expected to under-perform the CI WisdomTree. But the etf apears to be less risky and, when comparing its historical volatility, BMO Aggregate Bond is 4.28 times less risky than CI WisdomTree. The etf trades about -0.14 of its potential returns per unit of risk. The CI WisdomTree Japan is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,536 in CI WisdomTree Japan on September 12, 2024 and sell it today you would earn a total of 409.00 from holding CI WisdomTree Japan or generate 9.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Aggregate Bond vs. CI WisdomTree Japan
Performance |
| Timeline |
| BMO Aggregate Bond |
| CI WisdomTree Japan |
BMO Aggregate and CI WisdomTree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and CI WisdomTree
The main advantage of trading using opposite BMO Aggregate and CI WisdomTree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, CI WisdomTree 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 CI WisdomTree will offset losses from the drop in CI WisdomTree'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 |
| CI WisdomTree vs. BMO MSCI India | CI WisdomTree vs. BMO Aggregate Bond | CI WisdomTree vs. iShares Canadian HYBrid | CI WisdomTree vs. Brompton European Dividend |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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