Correlation Between BMO Concentrated and Fidelity Tactical

Can any of the company-specific risk be diversified away by investing in both BMO Concentrated and Fidelity Tactical 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 Fidelity Tactical 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 Fidelity Tactical High, you can compare the effects of market volatilities on BMO Concentrated and Fidelity Tactical 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 Fidelity Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Concentrated and Fidelity Tactical.

Diversification Opportunities for BMO Concentrated and Fidelity Tactical

0.23

Correlation Coefficient

BMO Concentrated  Fidelity Tactical

Modest diversification

The 3 months correlation between BMO and Fidelity is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding BMO Concentrated Global and Fidelity Tactical High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Tactical High 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 Fidelity Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Tactical High has no effect on the direction of BMO Concentrated i.e., BMO Concentrated and Fidelity Tactical go up and down completely randomly.

Pair Corralation between BMO Concentrated and Fidelity Tactical

Assuming the 90 days trading horizon BMO Concentrated Global is expected to under-perform the Fidelity Tactical. In addition to that, BMO Concentrated is 1.03 times more volatile than Fidelity Tactical High. It trades about -0.07 of its total potential returns per unit of risk. Fidelity Tactical High is currently generating about 0.16 per unit of volatility. If you would invest  1,051  in Fidelity Tactical High on October 21, 2024 and sell it today you would earn a total of  65.00  from holding Fidelity Tactical High or generate 6.18% return on investment over 90 days.

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

BMO Concentrated Global  vs.  Fidelity Tactical High

BMO Concentrated Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BMO Concentrated Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound fundamental indicators, BMO Concentrated is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Fidelity Tactical High

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Tactical High are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Fidelity Tactical is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BMO Concentrated and Fidelity Tactical

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

The idea behind BMO Concentrated Global and Fidelity Tactical High 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.