Correlation Between BMO Aggregate and Touchstone Exploration
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Touchstone Exploration 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 Touchstone Exploration 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 Touchstone Exploration, you can compare the effects of market volatilities on BMO Aggregate and Touchstone Exploration 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 Touchstone Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Touchstone Exploration.
Diversification Opportunities for BMO Aggregate and Touchstone Exploration
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BMO and Touchstone is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Touchstone Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Exploration 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 Touchstone Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Exploration has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Touchstone Exploration go up and down completely randomly.
Pair Corralation between BMO Aggregate and Touchstone Exploration
Assuming the 90 days trading horizon BMO Aggregate is expected to generate 2283.25 times less return on investment than Touchstone Exploration. But when comparing it to its historical volatility, BMO Aggregate Bond is 14.05 times less risky than Touchstone Exploration. It trades about 0.0 of its potential returns per unit of risk. Touchstone Exploration is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Touchstone Exploration on October 25, 2024 and sell it today you would earn a total of 7.00 from holding Touchstone Exploration or generate 17.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Aggregate Bond vs. Touchstone Exploration
Performance |
| Timeline |
| BMO Aggregate Bond |
| Touchstone Exploration |
BMO Aggregate and Touchstone Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Touchstone Exploration
The main advantage of trading using opposite BMO Aggregate and Touchstone Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Touchstone Exploration 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 Touchstone Exploration will offset losses from the drop in Touchstone Exploration'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 |
| Touchstone Exploration vs. Headwater Exploration | Touchstone Exploration vs. Gear Energy | Touchstone Exploration vs. Canacol Energy | Touchstone Exploration vs. InPlay Oil 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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