Correlation Between BMO Dividend and BMO MSCI
Can any of the company-specific risk be diversified away by investing in both BMO Dividend and BMO MSCI 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 Dividend and BMO MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Dividend CAD and BMO MSCI USA, you can compare the effects of market volatilities on BMO Dividend and BMO MSCI 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 Dividend with a short position of BMO MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Dividend and BMO MSCI.
Diversification Opportunities for BMO Dividend and BMO MSCI
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BMO and BMO is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding BMO Dividend CAD and BMO MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO MSCI USA and BMO Dividend 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 Dividend CAD are associated (or correlated) with BMO MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO MSCI USA has no effect on the direction of BMO Dividend i.e., BMO Dividend and BMO MSCI go up and down completely randomly.
Pair Corralation between BMO Dividend and BMO MSCI
Assuming the 90 days trading horizon BMO Dividend is expected to generate 1.17 times less return on investment than BMO MSCI. But when comparing it to its historical volatility, BMO Dividend CAD is 1.21 times less risky than BMO MSCI. It trades about 0.07 of its potential returns per unit of risk. BMO MSCI USA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,501 in BMO MSCI USA on September 4, 2024 and sell it today you would earn a total of 713.00 from holding BMO MSCI USA or generate 28.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Dividend CAD vs. BMO MSCI USA
Performance |
| Timeline |
| BMO Dividend CAD |
| BMO MSCI USA |
BMO Dividend and BMO MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Dividend and BMO MSCI
The main advantage of trading using opposite BMO Dividend and BMO MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Dividend position performs unexpectedly, BMO MSCI 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 BMO MSCI will offset losses from the drop in BMO MSCI's long position.| BMO Dividend vs. BMO Short Term Bond | BMO Dividend vs. BMO Canadian Bank | BMO Dividend vs. BMO Aggregate Bond | BMO Dividend vs. BMO Balanced ETF |
| BMO MSCI vs. BMO MSCI Canada | BMO MSCI vs. BMO Low Volatility | BMO MSCI vs. BMO Low Volatility | BMO MSCI vs. BMO MSCI All |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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