Correlation Between BMO SP and Fidelity International
Can any of the company-specific risk be diversified away by investing in both BMO SP and Fidelity International 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 SP and Fidelity International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO SP 500 and Fidelity International High, you can compare the effects of market volatilities on BMO SP and Fidelity International 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 SP with a short position of Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO SP and Fidelity International.
Diversification Opportunities for BMO SP and Fidelity International
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BMO and Fidelity is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding BMO SP 500 and Fidelity International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and BMO SP 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 SP 500 are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of BMO SP i.e., BMO SP and Fidelity International go up and down completely randomly.
Pair Corralation between BMO SP and Fidelity International
Assuming the 90 days trading horizon BMO SP 500 is expected to generate 0.98 times more return on investment than Fidelity International. However, BMO SP 500 is 1.02 times less risky than Fidelity International. It trades about 0.13 of its potential returns per unit of risk. Fidelity International High is currently generating about 0.05 per unit of risk. If you would invest 7,268 in BMO SP 500 on August 29, 2024 and sell it today you would earn a total of 1,019 from holding BMO SP 500 or generate 14.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO SP 500 vs. Fidelity International High
Performance |
| Timeline |
| BMO SP 500 |
| Fidelity International |
BMO SP and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO SP and Fidelity International
The main advantage of trading using opposite BMO SP and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO SP position performs unexpectedly, Fidelity International 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 Fidelity International will offset losses from the drop in Fidelity International's long position.| BMO SP vs. BMO MSCI EAFE | BMO SP vs. BMO Dow Jones | BMO SP vs. BMO SPTSX Capped | BMO SP vs. BMO MSCI Emerging |
| Fidelity International vs. BMO SP 500 | Fidelity International vs. BMO MSCI Emerging | Fidelity International vs. BMO Global Infrastructure | Fidelity International vs. BMO MSCI EAFE |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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