Correlation Between BMO Equal and IShares India
Can any of the company-specific risk be diversified away by investing in both BMO Equal and IShares India 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 IShares India 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 iShares India Index, you can compare the effects of market volatilities on BMO Equal and IShares India 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 IShares India. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Equal and IShares India.
Diversification Opportunities for BMO Equal and IShares India
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BMO and IShares is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding BMO Equal Weight and iShares India Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares India Index 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 IShares India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares India Index has no effect on the direction of BMO Equal i.e., BMO Equal and IShares India go up and down completely randomly.
Pair Corralation between BMO Equal and IShares India
Assuming the 90 days trading horizon BMO Equal Weight is expected to generate 2.96 times more return on investment than IShares India. However, BMO Equal is 2.96 times more volatile than iShares India Index. It trades about 0.23 of its potential returns per unit of risk. iShares India Index is currently generating about 0.01 per unit of risk. If you would invest 3,126 in BMO Equal Weight on September 1, 2024 and sell it today you would earn a total of 431.00 from holding BMO Equal Weight or generate 13.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BMO Equal Weight vs. iShares India Index
Performance |
| Timeline |
| BMO Equal Weight |
| iShares India Index |
BMO Equal and IShares India Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Equal and IShares India
The main advantage of trading using opposite BMO Equal and IShares India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Equal position performs unexpectedly, IShares India 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 IShares India will offset losses from the drop in IShares India'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 |
| IShares India vs. iShares MSCI Emerging | IShares India vs. iShares Global Infrastructure | IShares India vs. iShares IG Corporate | IShares India vs. iShares Global Real |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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