Correlation Between BMO Aggregate and Purpose Strategic
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Purpose Strategic 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 Purpose Strategic 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 Purpose Strategic Yield, you can compare the effects of market volatilities on BMO Aggregate and Purpose Strategic 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 Purpose Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Purpose Strategic.
Diversification Opportunities for BMO Aggregate and Purpose Strategic
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BMO and Purpose is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Purpose Strategic Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose Strategic Yield 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 Purpose Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose Strategic Yield has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Purpose Strategic go up and down completely randomly.
Pair Corralation between BMO Aggregate and Purpose Strategic
Assuming the 90 days trading horizon BMO Aggregate is expected to generate 5.75 times less return on investment than Purpose Strategic. In addition to that, BMO Aggregate is 1.17 times more volatile than Purpose Strategic Yield. It trades about 0.03 of its total potential returns per unit of risk. Purpose Strategic Yield is currently generating about 0.19 per unit of volatility. If you would invest 1,743 in Purpose Strategic Yield on August 25, 2024 and sell it today you would earn a total of 182.00 from holding Purpose Strategic Yield or generate 10.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Aggregate Bond vs. Purpose Strategic Yield
Performance |
| Timeline |
| BMO Aggregate Bond |
| Purpose Strategic Yield |
BMO Aggregate and Purpose Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Purpose Strategic
The main advantage of trading using opposite BMO Aggregate and Purpose Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Purpose Strategic 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 Purpose Strategic will offset losses from the drop in Purpose Strategic'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 |
| Purpose Strategic vs. BMO Mid Federal | Purpose Strategic vs. BMO Short Corporate | Purpose Strategic vs. BMO Emerging Markets | Purpose Strategic vs. BMO Long Corporate |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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