Correlation Between BMO Aggregate and Terreno Resources
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Terreno Resources 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 Terreno Resources 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 Terreno Resources Corp, you can compare the effects of market volatilities on BMO Aggregate and Terreno Resources 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 Terreno Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Terreno Resources.
Diversification Opportunities for BMO Aggregate and Terreno Resources
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BMO and Terreno is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Terreno Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terreno Resources 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 Terreno Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terreno Resources Corp has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Terreno Resources go up and down completely randomly.
Pair Corralation between BMO Aggregate and Terreno Resources
Assuming the 90 days trading horizon BMO Aggregate Bond is expected to under-perform the Terreno Resources. But the etf apears to be less risky and, when comparing its historical volatility, BMO Aggregate Bond is 51.35 times less risky than Terreno Resources. The etf trades about 0.0 of its potential returns per unit of risk. The Terreno Resources Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Terreno Resources Corp on August 27, 2024 and sell it today you would lose (1.00) from holding Terreno Resources Corp or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Aggregate Bond vs. Terreno Resources Corp
Performance |
| Timeline |
| BMO Aggregate Bond |
| Terreno Resources Corp |
BMO Aggregate and Terreno Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Terreno Resources
The main advantage of trading using opposite BMO Aggregate and Terreno Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Terreno Resources 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 Terreno Resources will offset losses from the drop in Terreno Resources' 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 |
| Terreno Resources vs. First Majestic Silver | Terreno Resources vs. Ivanhoe Energy | Terreno Resources vs. Orezone Gold Corp | Terreno Resources vs. Faraday Copper Corp |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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