Correlation Between BMO Equal and Harvest Bank
Can any of the company-specific risk be diversified away by investing in both BMO Equal and Harvest Bank 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 Equal and Harvest Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Equal Weight and Harvest Bank Leaders, you can compare the effects of market volatilities on BMO Equal and Harvest Bank 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 Equal with a short position of Harvest Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Equal and Harvest Bank.
Diversification Opportunities for BMO Equal and Harvest Bank
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between BMO and Harvest is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding BMO Equal Weight and Harvest Bank Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Bank Leaders and BMO Equal 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 Equal Weight are associated (or correlated) with Harvest Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Bank Leaders has no effect on the direction of BMO Equal i.e., BMO Equal and Harvest Bank go up and down completely randomly.
Pair Corralation between BMO Equal and Harvest Bank
Assuming the 90 days trading horizon BMO Equal Weight is expected to generate 1.16 times more return on investment than Harvest Bank. However, BMO Equal is 1.16 times more volatile than Harvest Bank Leaders. It trades about 0.22 of its potential returns per unit of risk. Harvest Bank Leaders is currently generating about 0.22 per unit of risk. If you would invest 3,129 in BMO Equal Weight on August 25, 2024 and sell it today you would earn a total of 418.00 from holding BMO Equal Weight or generate 13.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Equal Weight vs. Harvest Bank Leaders
Performance |
| Timeline |
| BMO Equal Weight |
| Harvest Bank Leaders |
BMO Equal and Harvest Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Equal and Harvest Bank
The main advantage of trading using opposite BMO Equal and Harvest Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Equal position performs unexpectedly, Harvest Bank 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 Harvest Bank will offset losses from the drop in Harvest Bank's long position.| BMO Equal vs. BMO Equal Weight | BMO Equal vs. BMO Equal Weight | BMO Equal vs. BMO SPTSX Equal | BMO Equal vs. BMO Equal Weight |
| Harvest Bank vs. Harvest Brand Leaders | Harvest Bank vs. Harvest Tech Achievers | Harvest Bank vs. Harvest Equal Weight | Harvest Bank vs. Energy Leaders Plus |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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