Correlation Between BMO Tactical and NBI Liquid
Can any of the company-specific risk be diversified away by investing in both BMO Tactical and NBI Liquid 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 Tactical and NBI Liquid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Tactical Dividend and NBI Liquid Alternatives, you can compare the effects of market volatilities on BMO Tactical and NBI Liquid 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 Tactical with a short position of NBI Liquid. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Tactical and NBI Liquid.
Diversification Opportunities for BMO Tactical and NBI Liquid
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BMO and NBI is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding BMO Tactical Dividend and NBI Liquid Alternatives in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Liquid Alternatives and BMO Tactical 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 Tactical Dividend are associated (or correlated) with NBI Liquid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Liquid Alternatives has no effect on the direction of BMO Tactical i.e., BMO Tactical and NBI Liquid go up and down completely randomly.
Pair Corralation between BMO Tactical and NBI Liquid
Assuming the 90 days trading horizon BMO Tactical Dividend is expected to generate 1.27 times more return on investment than NBI Liquid. However, BMO Tactical is 1.27 times more volatile than NBI Liquid Alternatives. It trades about 0.05 of its potential returns per unit of risk. NBI Liquid Alternatives is currently generating about -0.01 per unit of risk. If you would invest 2,511 in BMO Tactical Dividend on September 3, 2024 and sell it today you would earn a total of 379.00 from holding BMO Tactical Dividend or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Tactical Dividend vs. NBI Liquid Alternatives
Performance |
| Timeline |
| BMO Tactical Dividend |
| NBI Liquid Alternatives |
BMO Tactical and NBI Liquid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Tactical and NBI Liquid
The main advantage of trading using opposite BMO Tactical and NBI Liquid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Tactical position performs unexpectedly, NBI Liquid 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 NBI Liquid will offset losses from the drop in NBI Liquid's long position.| BMO Tactical vs. BMO Premium Yield | BMO Tactical vs. BMO Europe High | BMO Tactical vs. BMO Europe High | BMO Tactical vs. BMO SPTSX Equal |
| NBI Liquid vs. AGFiQ Market Neutral | NBI Liquid vs. Picton Mahoney Fortified | NBI Liquid vs. Purpose Diversified Real | NBI Liquid vs. Desjardins Alt LongShort |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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