Correlation Between BMO Aggregate and Nova Leap
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Nova Leap 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 Nova Leap 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 Nova Leap Health, you can compare the effects of market volatilities on BMO Aggregate and Nova Leap 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 Nova Leap. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Nova Leap.
Diversification Opportunities for BMO Aggregate and Nova Leap
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between BMO and Nova is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Nova Leap Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Leap Health 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 Nova Leap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Leap Health has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Nova Leap go up and down completely randomly.
Pair Corralation between BMO Aggregate and Nova Leap
Assuming the 90 days trading horizon BMO Aggregate Bond is expected to generate 0.11 times more return on investment than Nova Leap. However, BMO Aggregate Bond is 9.09 times less risky than Nova Leap. It trades about 0.1 of its potential returns per unit of risk. Nova Leap Health is currently generating about -0.12 per unit of risk. If you would invest 2,979 in BMO Aggregate Bond on November 4, 2024 and sell it today you would earn a total of 19.00 from holding BMO Aggregate Bond or generate 0.64% 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. Nova Leap Health
Performance |
| Timeline |
| BMO Aggregate Bond |
| Nova Leap Health |
BMO Aggregate and Nova Leap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Nova Leap
The main advantage of trading using opposite BMO Aggregate and Nova Leap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Nova Leap 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 Nova Leap will offset losses from the drop in Nova Leap'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 |
| Nova Leap vs. ESE Entertainment | Nova Leap vs. Therma Bright | Nova Leap vs. iShares Canadian HYBrid | Nova Leap vs. Altagas Cum Red |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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