Correlation Between Bitcoin and BMO Short

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

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

Diversification Opportunities for Bitcoin and BMO Short

-0.57

Correlation Coefficient

Bitcoin  BMO Short

Excellent diversification

The 3 months correlation between Bitcoin and BMO is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and BMO Short Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Short Federal and 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 Bitcoin are associated (or correlated) with BMO Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Short Federal has no effect on the direction of Bitcoin i.e., Bitcoin and BMO Short go up and down completely randomly.

Pair Corralation between Bitcoin and BMO Short

Assuming the 90 days trading horizon Bitcoin is expected to under-perform the BMO Short. In addition to that, Bitcoin is 24.45 times more volatile than BMO Short Federal. It trades about -0.09 of its total potential returns per unit of risk. BMO Short Federal is currently generating about 0.29 per unit of volatility. If you would invest  2,198  in BMO Short Federal on December 21, 2024 and sell it today you would earn a total of  39.00  from holding BMO Short Federal or generate 1.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Bitcoin  vs.  BMO Short Federal

Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Bitcoin shareholders.

BMO Short Federal

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Short Federal are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BMO Short is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bitcoin and BMO Short

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

The idea behind Bitcoin and BMO Short Federal 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.