Correlation Between BMO Concentrated and Edgepoint Global

Can any of the company-specific risk be diversified away by investing in both BMO Concentrated and Edgepoint Global 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 Concentrated and Edgepoint Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BMO Concentrated Global and Edgepoint Global Portfolio, you can compare the effects of market volatilities on BMO Concentrated and Edgepoint Global 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 Concentrated with a short position of Edgepoint Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Concentrated and Edgepoint Global.

Diversification Opportunities for BMO Concentrated and Edgepoint Global

0.87

Correlation Coefficient

BMO Concentrated  Edgepoint Global

Very poor diversification

The 3 months correlation between BMO and Edgepoint is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding BMO Concentrated Global and Edgepoint Global Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgepoint Global Por and BMO Concentrated 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 Concentrated Global are associated (or correlated) with Edgepoint Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgepoint Global Por has no effect on the direction of BMO Concentrated i.e., BMO Concentrated and Edgepoint Global go up and down completely randomly.

Pair Corralation between BMO Concentrated and Edgepoint Global

Assuming the 90 days trading horizon BMO Concentrated Global is expected to generate 0.77 times more return on investment than Edgepoint Global. However, BMO Concentrated Global is 1.31 times less risky than Edgepoint Global. It trades about 0.22 of its potential returns per unit of risk. Edgepoint Global Portfolio is currently generating about 0.15 per unit of risk. If you would invest  1,754  in BMO Concentrated Global on August 31, 2024 and sell it today you would earn a total of  119.00  from holding BMO Concentrated Global or generate 6.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

BMO Concentrated Global  vs.  Edgepoint Global Portfolio

BMO Concentrated Global

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Concentrated Global are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather inconsistent fundamental indicators, BMO Concentrated may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Edgepoint Global Por

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Edgepoint Global Portfolio are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong forward indicators, Edgepoint Global is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with BMO Concentrated and Edgepoint Global

The main advantage of trading using opposite BMO Concentrated and Edgepoint Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Concentrated position performs unexpectedly, Edgepoint Global 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 Edgepoint Global will offset losses from the drop in Edgepoint Global's long position.

The idea behind BMO Concentrated Global and Edgepoint Global Portfolio pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.