Correlation Between BMO High and BMO MSCI
Can any of the company-specific risk be diversified away by investing in both BMO High and BMO MSCI 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 BMO MSCI 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 BMO MSCI Europe, you can compare the effects of market volatilities on BMO High and BMO MSCI 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 BMO MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO High and BMO MSCI.
Diversification Opportunities for BMO High and BMO MSCI
Excellent diversification
The 3 months correlation between BMO and BMO is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding BMO High Dividend and BMO MSCI Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO MSCI Europe 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 BMO MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO MSCI Europe has no effect on the direction of BMO High i.e., BMO High and BMO MSCI go up and down completely randomly.
Pair Corralation between BMO High and BMO MSCI
Assuming the 90 days trading horizon BMO High Dividend is expected to generate 0.76 times more return on investment than BMO MSCI. However, BMO High Dividend is 1.32 times less risky than BMO MSCI. It trades about 0.13 of its potential returns per unit of risk. BMO MSCI Europe is currently generating about 0.03 per unit of risk. If you would invest 2,007 in BMO High Dividend on August 28, 2024 and sell it today you would earn a total of 518.00 from holding BMO High Dividend or generate 25.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO High Dividend vs. BMO MSCI Europe
Performance |
| Timeline |
| BMO High Dividend |
| BMO MSCI Europe |
BMO High and BMO MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO High and BMO MSCI
The main advantage of trading using opposite BMO High and BMO MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO High position performs unexpectedly, BMO MSCI 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 BMO MSCI will offset losses from the drop in BMO MSCI'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 |
| BMO MSCI vs. BMO Europe High | BMO MSCI vs. BMO High Dividend | BMO MSCI vs. BMO Covered Call | BMO MSCI vs. BMO Premium Yield |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| 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 | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |