Correlation Between BMO Covered and CI Canadian
Can any of the company-specific risk be diversified away by investing in both BMO Covered and CI Canadian 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 Covered and CI Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Covered Call and CI Canadian Banks, you can compare the effects of market volatilities on BMO Covered and CI Canadian 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 Covered with a short position of CI Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Covered and CI Canadian.
Diversification Opportunities for BMO Covered and CI Canadian
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BMO and CIC is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding BMO Covered Call and CI Canadian Banks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Canadian Banks and BMO Covered 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 Covered Call are associated (or correlated) with CI Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Canadian Banks has no effect on the direction of BMO Covered i.e., BMO Covered and CI Canadian go up and down completely randomly.
Pair Corralation between BMO Covered and CI Canadian
Assuming the 90 days trading horizon BMO Covered Call is expected to generate 2.63 times more return on investment than CI Canadian. However, BMO Covered is 2.63 times more volatile than CI Canadian Banks. It trades about 0.3 of its potential returns per unit of risk. CI Canadian Banks is currently generating about 0.21 per unit of risk. If you would invest 2,497 in BMO Covered Call on November 4, 2024 and sell it today you would earn a total of 170.00 from holding BMO Covered Call or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Covered Call vs. CI Canadian Banks
Performance |
| Timeline |
| BMO Covered Call |
| CI Canadian Banks |
BMO Covered and CI Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Covered and CI Canadian
The main advantage of trading using opposite BMO Covered and CI Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Covered position performs unexpectedly, CI Canadian 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 Canadian will offset losses from the drop in CI Canadian's long position.| BMO Covered vs. BMO Global High | BMO Covered vs. BMO Covered Call | BMO Covered vs. BMO Europe High | BMO Covered vs. BMO Canadian High |
| CI Canadian vs. Celestica | CI Canadian vs. Descartes Systems Group | CI Canadian vs. Hamilton Mid Cap Financials | CI Canadian vs. CI Canada Lifeco |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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