Correlation Between BMO Europe and IShares Canadian
Can any of the company-specific risk be diversified away by investing in both BMO Europe and IShares 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 Europe and IShares Canadian 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 Canadian HYBrid, you can compare the effects of market volatilities on BMO Europe and IShares 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 Europe with a short position of IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Europe and IShares Canadian.
Diversification Opportunities for BMO Europe and IShares Canadian
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BMO and IShares is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding BMO Europe High and iShares Canadian HYBrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian HYBrid 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 Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Canadian HYBrid has no effect on the direction of BMO Europe i.e., BMO Europe and IShares Canadian go up and down completely randomly.
Pair Corralation between BMO Europe and IShares Canadian
Assuming the 90 days trading horizon BMO Europe High is expected to under-perform the IShares Canadian. In addition to that, BMO Europe is 2.13 times more volatile than iShares Canadian HYBrid. It trades about -0.17 of its total potential returns per unit of risk. iShares Canadian HYBrid is currently generating about 0.23 per unit of volatility. If you would invest 1,955 in iShares Canadian HYBrid on September 1, 2024 and sell it today you would earn a total of 36.00 from holding iShares Canadian HYBrid or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BMO Europe High vs. iShares Canadian HYBrid
Performance |
| Timeline |
| BMO Europe High |
| iShares Canadian HYBrid |
BMO Europe and IShares Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Europe and IShares Canadian
The main advantage of trading using opposite BMO Europe and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Europe position performs unexpectedly, IShares 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 IShares Canadian will offset losses from the drop in IShares Canadian's long position.| BMO Europe vs. BMO Europe High | BMO Europe vs. BMO High Dividend | BMO Europe vs. BMO Covered Call | BMO Europe vs. BMO Global High |
| IShares Canadian vs. Global X Active | IShares Canadian vs. Brompton Flaherty Crumrine | IShares Canadian vs. CIBC Core Fixed | IShares Canadian vs. BMO Aggregate 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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