Correlation Between Ninepoint Bitcoin and BMO Balanced

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

By analyzing existing cross correlation between Ninepoint Bitcoin ETF and BMO Balanced ESG, you can compare the effects of market volatilities on Ninepoint Bitcoin and BMO Balanced 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 Ninepoint Bitcoin with a short position of BMO Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ninepoint Bitcoin and BMO Balanced.

Diversification Opportunities for Ninepoint Bitcoin and BMO Balanced

-0.14

Correlation Coefficient

Ninepoint Bitcoin  BMO Balanced

Good diversification

The 3 months correlation between Ninepoint and BMO is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ninepoint Bitcoin ETF and BMO Balanced ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Balanced ESG and Ninepoint Bitcoin 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 Ninepoint Bitcoin ETF are associated (or correlated) with BMO Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Balanced ESG has no effect on the direction of Ninepoint Bitcoin i.e., Ninepoint Bitcoin and BMO Balanced go up and down completely randomly.

Pair Corralation between Ninepoint Bitcoin and BMO Balanced

Assuming the 90 days trading horizon Ninepoint Bitcoin ETF is expected to under-perform the BMO Balanced. In addition to that, Ninepoint Bitcoin is 8.75 times more volatile than BMO Balanced ESG. It trades about -0.14 of its total potential returns per unit of risk. BMO Balanced ESG is currently generating about 0.0 per unit of volatility. If you would invest  3,880  in BMO Balanced ESG on December 4, 2024 and sell it today you would earn a total of  1.00  from holding BMO Balanced ESG or generate 0.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ninepoint Bitcoin ETF  vs.  BMO Balanced ESG

Ninepoint Bitcoin ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ninepoint Bitcoin ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

BMO Balanced ESG

Risk-Adjusted Performance

Very Weak

Over the last 90 days BMO Balanced ESG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, BMO Balanced is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ninepoint Bitcoin and BMO Balanced

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

The idea behind Ninepoint Bitcoin ETF and BMO Balanced ESG 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .