Correlation Between BMO Europe and IShares High
Can any of the company-specific risk be diversified away by investing in both BMO Europe and IShares 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 Europe and IShares High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Europe High and iShares High Dividend, you can compare the effects of market volatilities on BMO Europe and IShares 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 Europe with a short position of IShares High. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Europe and IShares High.
Diversification Opportunities for BMO Europe and IShares High
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between BMO and IShares is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding BMO Europe High and iShares High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares High Dividend and BMO Europe 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 Europe High are associated (or correlated) with IShares High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares High Dividend has no effect on the direction of BMO Europe i.e., BMO Europe and IShares High go up and down completely randomly.
Pair Corralation between BMO Europe and IShares High
Assuming the 90 days trading horizon BMO Europe High is expected to under-perform the IShares High. But the etf apears to be less risky and, when comparing its historical volatility, BMO Europe High is 1.02 times less risky than IShares High. The etf trades about -0.22 of its potential returns per unit of risk. The iShares High Dividend is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,460 in iShares High Dividend on August 29, 2024 and sell it today you would earn a total of 90.00 from holding iShares High Dividend or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Europe High vs. iShares High Dividend
Performance |
| Timeline |
| BMO Europe High |
| iShares High Dividend |
BMO Europe and IShares High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Europe and IShares High
The main advantage of trading using opposite BMO Europe and IShares High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Europe position performs unexpectedly, IShares 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 IShares High will offset losses from the drop in IShares High's long position.| BMO Europe vs. BMO Covered Call | BMO Europe vs. BMO High Dividend | BMO Europe vs. BMO Europe High | BMO Europe vs. BMO Covered Call |
| IShares High vs. BMO Europe High | IShares High vs. BMO Covered Call | IShares High vs. BMO Europe High | IShares High vs. Forstrong Global Income |
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 Positions Ratings module to 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.
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