Correlation Between BMO High and CI Europe
Can any of the company-specific risk be diversified away by investing in both BMO High and CI Europe 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 High and CI Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO High Dividend and CI Europe Hedged, you can compare the effects of market volatilities on BMO High and CI Europe 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 High with a short position of CI Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO High and CI Europe.
Diversification Opportunities for BMO High and CI Europe
Very good diversification
The 3 months correlation between BMO and EHE is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding BMO High Dividend and CI Europe Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Europe Hedged and BMO High 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 High Dividend are associated (or correlated) with CI Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Europe Hedged has no effect on the direction of BMO High i.e., BMO High and CI Europe go up and down completely randomly.
Pair Corralation between BMO High and CI Europe
Assuming the 90 days trading horizon BMO High Dividend is expected to generate 0.98 times more return on investment than CI Europe. However, BMO High Dividend is 1.02 times less risky than CI Europe. It trades about 0.22 of its potential returns per unit of risk. CI Europe Hedged is currently generating about -0.11 per unit of risk. If you would invest 2,445 in BMO High Dividend on September 1, 2024 and sell it today you would earn a total of 91.00 from holding BMO High Dividend or generate 3.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO High Dividend vs. CI Europe Hedged
Performance |
| Timeline |
| BMO High Dividend |
| CI Europe Hedged |
BMO High and CI Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO High and CI Europe
The main advantage of trading using opposite BMO High and CI Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO High position performs unexpectedly, CI Europe 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 CI Europe will offset losses from the drop in CI Europe's long position.| BMO High vs. BMO Europe High | BMO High vs. BMO Covered Call | BMO High vs. BMO Covered Call | BMO High vs. BMO Europe High |
| CI Europe vs. NBI High Yield | CI Europe vs. NBI Unconstrained Fixed | CI Europe vs. Mackenzie Developed ex North | CI Europe vs. BMO Short Term Bond |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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