Correlation Between BMO MSCI and Fidelity Value
Can any of the company-specific risk be diversified away by investing in both BMO MSCI and Fidelity Value 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 Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO MSCI Canada and Fidelity Value ETF, you can compare the effects of market volatilities on BMO MSCI and Fidelity Value 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 Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO MSCI and Fidelity Value.
Diversification Opportunities for BMO MSCI and Fidelity Value
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BMO and Fidelity is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding BMO MSCI Canada and Fidelity Value ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Value ETF 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 Canada are associated (or correlated) with Fidelity Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Value ETF has no effect on the direction of BMO MSCI i.e., BMO MSCI and Fidelity Value go up and down completely randomly.
Pair Corralation between BMO MSCI and Fidelity Value
Assuming the 90 days trading horizon BMO MSCI is expected to generate 1.59 times less return on investment than Fidelity Value. But when comparing it to its historical volatility, BMO MSCI Canada is 1.27 times less risky than Fidelity Value. It trades about 0.4 of its potential returns per unit of risk. Fidelity Value ETF is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 1,998 in Fidelity Value ETF on November 2, 2024 and sell it today you would earn a total of 136.00 from holding Fidelity Value ETF or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
BMO MSCI Canada vs. Fidelity Value ETF
Performance |
| Timeline |
| BMO MSCI Canada |
| Fidelity Value ETF |
BMO MSCI and Fidelity Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO MSCI and Fidelity Value
The main advantage of trading using opposite BMO MSCI and Fidelity Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO MSCI position performs unexpectedly, Fidelity Value 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 Value will offset losses from the drop in Fidelity Value's long position.| BMO MSCI vs. BMO MSCI USA | BMO MSCI vs. BMO Low Volatility | BMO MSCI vs. BMO International Dividend | BMO MSCI vs. BMO Low Volatility |
| Fidelity Value vs. Fidelity Canadian Value | Fidelity Value vs. Fidelity High Quality | Fidelity Value vs. Fidelity International Value | Fidelity Value vs. Fidelity Canadian High |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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