Correlation Between BMO MSCI and Fidelity High
Can any of the company-specific risk be diversified away by investing in both BMO MSCI and Fidelity High 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 MSCI and Fidelity High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO MSCI USA and Fidelity High Quality, you can compare the effects of market volatilities on BMO MSCI and Fidelity High 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 MSCI with a short position of Fidelity High. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO MSCI and Fidelity High.
Diversification Opportunities for BMO MSCI and Fidelity High
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BMO and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding BMO MSCI USA and Fidelity High Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity High Quality and BMO MSCI 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 MSCI USA are associated (or correlated) with Fidelity High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity High Quality has no effect on the direction of BMO MSCI i.e., BMO MSCI and Fidelity High go up and down completely randomly.
Pair Corralation between BMO MSCI and Fidelity High
Assuming the 90 days trading horizon BMO MSCI USA is expected to generate 1.17 times more return on investment than Fidelity High. However, BMO MSCI is 1.17 times more volatile than Fidelity High Quality. It trades about 0.14 of its potential returns per unit of risk. Fidelity High Quality is currently generating about 0.13 per unit of risk. If you would invest 5,178 in BMO MSCI USA on August 29, 2024 and sell it today you would earn a total of 3,723 from holding BMO MSCI USA or generate 71.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO MSCI USA vs. Fidelity High Quality
Performance |
| Timeline |
| BMO MSCI USA |
| Fidelity High Quality |
BMO MSCI and Fidelity High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO MSCI and Fidelity High
The main advantage of trading using opposite BMO MSCI and Fidelity High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO MSCI position performs unexpectedly, Fidelity High 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 High will offset losses from the drop in Fidelity High's long position.| BMO MSCI vs. BMO MSCI All | BMO MSCI vs. BMO Low Volatility | BMO MSCI vs. BMO MSCI Europe | BMO MSCI vs. BMO MSCI Emerging |
| Fidelity High vs. BMO Low Volatility | Fidelity High vs. BMO MSCI USA | Fidelity High vs. BMO Equal Weight | Fidelity High vs. BMO Dividend ETF |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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