Correlation Between BMO Aggregate and RBC Quant
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and RBC Quant 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 RBC Quant 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 RBC Quant Emerging, you can compare the effects of market volatilities on BMO Aggregate and RBC Quant 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 RBC Quant. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and RBC Quant.
Diversification Opportunities for BMO Aggregate and RBC Quant
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between BMO and RBC is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and RBC Quant Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Quant Emerging 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 RBC Quant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Quant Emerging has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and RBC Quant go up and down completely randomly.
Pair Corralation between BMO Aggregate and RBC Quant
Assuming the 90 days trading horizon BMO Aggregate is expected to generate 4.54 times less return on investment than RBC Quant. But when comparing it to its historical volatility, BMO Aggregate Bond is 2.14 times less risky than RBC Quant. It trades about 0.04 of its potential returns per unit of risk. RBC Quant Emerging is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,795 in RBC Quant Emerging on August 29, 2024 and sell it today you would earn a total of 315.00 from holding RBC Quant Emerging or generate 17.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
BMO Aggregate Bond vs. RBC Quant Emerging
Performance |
| Timeline |
| BMO Aggregate Bond |
| RBC Quant Emerging |
BMO Aggregate and RBC Quant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and RBC Quant
The main advantage of trading using opposite BMO Aggregate and RBC Quant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, RBC Quant 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 RBC Quant will offset losses from the drop in RBC Quant'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 |
| RBC Quant vs. RBC Quant European | RBC Quant vs. RBC Quant Canadian | RBC Quant vs. RBC Quant EAFE | RBC Quant vs. RBC Quant 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |