Correlation Between BMO SP and Mackenzie Large
Can any of the company-specific risk be diversified away by investing in both BMO SP and Mackenzie Large 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 Mackenzie Large 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 Mackenzie Large Cap, you can compare the effects of market volatilities on BMO SP and Mackenzie Large 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 Mackenzie Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO SP and Mackenzie Large.
Diversification Opportunities for BMO SP and Mackenzie Large
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between BMO and Mackenzie is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding BMO SP 500 and Mackenzie Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Large Cap 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 Mackenzie Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Large Cap has no effect on the direction of BMO SP i.e., BMO SP and Mackenzie Large go up and down completely randomly.
Pair Corralation between BMO SP and Mackenzie Large
Assuming the 90 days trading horizon BMO SP is expected to generate 1.06 times less return on investment than Mackenzie Large. In addition to that, BMO SP is 1.01 times more volatile than Mackenzie Large Cap. It trades about 0.15 of its total potential returns per unit of risk. Mackenzie Large Cap is currently generating about 0.16 per unit of volatility. If you would invest 14,979 in Mackenzie Large Cap on September 3, 2024 and sell it today you would earn a total of 5,030 from holding Mackenzie Large Cap or generate 33.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO SP 500 vs. Mackenzie Large Cap
Performance |
| Timeline |
| BMO SP 500 |
| Mackenzie Large Cap |
BMO SP and Mackenzie Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO SP and Mackenzie Large
The main advantage of trading using opposite BMO SP and Mackenzie Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO SP position performs unexpectedly, Mackenzie Large 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 Mackenzie Large will offset losses from the drop in Mackenzie Large'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 |
| Mackenzie Large vs. Franklin Bissett Corporate | Mackenzie Large vs. FT AlphaDEX Industrials | Mackenzie Large vs. Dynamic Active Dividend | Mackenzie Large vs. BMO Aggregate Bond |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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