Correlation Between BMO Equal and IShares Global
Can any of the company-specific risk be diversified away by investing in both BMO Equal and IShares Global 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 Global 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 Global Real, you can compare the effects of market volatilities on BMO Equal and IShares Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Equal and IShares Global.
Diversification Opportunities for BMO Equal and IShares Global
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BMO and IShares is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding BMO Equal Weight and iShares Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Real 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Real has no effect on the direction of BMO Equal i.e., BMO Equal and IShares Global go up and down completely randomly.
Pair Corralation between BMO Equal and IShares Global
Assuming the 90 days trading horizon BMO Equal Weight is expected to under-perform the IShares Global. In addition to that, BMO Equal is 1.34 times more volatile than iShares Global Real. It trades about -0.21 of its total potential returns per unit of risk. iShares Global Real is currently generating about 0.12 per unit of volatility. If you would invest 3,015 in iShares Global Real on November 2, 2024 and sell it today you would earn a total of 76.00 from holding iShares Global Real or generate 2.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Equal Weight vs. iShares Global Real
Performance |
| Timeline |
| BMO Equal Weight |
| iShares Global Real |
BMO Equal and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Equal and IShares Global
The main advantage of trading using opposite BMO Equal and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Equal position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.| BMO Equal vs. iShares SPTSX Capped | BMO Equal vs. BMO Equal Weight | BMO Equal vs. BMO Covered Call | BMO Equal vs. BMO SPTSX Equal |
| IShares Global vs. iShares Global Infrastructure | IShares Global vs. iShares Global Monthly | IShares Global vs. iShares 1 5 Year | IShares Global vs. iShares Equal Weight |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |