Correlation Between BMO Global and Harvest Equal
Can any of the company-specific risk be diversified away by investing in both BMO Global and Harvest Equal 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 Global and Harvest Equal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Global High and Harvest Equal Weight, you can compare the effects of market volatilities on BMO Global and Harvest Equal 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 Global with a short position of Harvest Equal. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Global and Harvest Equal.
Diversification Opportunities for BMO Global and Harvest Equal
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BMO and Harvest is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BMO Global High and Harvest Equal Weight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Equal Weight and BMO Global 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 Global High are associated (or correlated) with Harvest Equal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Equal Weight has no effect on the direction of BMO Global i.e., BMO Global and Harvest Equal go up and down completely randomly.
Pair Corralation between BMO Global and Harvest Equal
Assuming the 90 days trading horizon BMO Global is expected to generate 1.06 times less return on investment than Harvest Equal. But when comparing it to its historical volatility, BMO Global High is 1.24 times less risky than Harvest Equal. It trades about 0.1 of its potential returns per unit of risk. Harvest Equal Weight is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,785 in Harvest Equal Weight on August 28, 2024 and sell it today you would earn a total of 24.00 from holding Harvest Equal Weight or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Global High vs. Harvest Equal Weight
Performance |
| Timeline |
| BMO Global High |
| Harvest Equal Weight |
BMO Global and Harvest Equal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Global and Harvest Equal
The main advantage of trading using opposite BMO Global and Harvest Equal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Global position performs unexpectedly, Harvest Equal 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 Harvest Equal will offset losses from the drop in Harvest Equal's long position.| BMO Global vs. Global Atomic Corp | BMO Global vs. enCore Energy Corp | BMO Global vs. Fission Uranium Corp | BMO Global vs. NexGen Energy |
| Harvest Equal vs. BMO Equal Weight | Harvest Equal vs. BMO SPTSX Equal | Harvest Equal vs. BMO 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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