Correlation Between Bitcoin ETF and BMO MSCI

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

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

Diversification Opportunities for Bitcoin ETF and BMO MSCI

0.54

Correlation Coefficient

Bitcoin ETF  BMO MSCI

Very weak diversification

The 3 months correlation between Bitcoin and BMO is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin ETF CAD and BMO MSCI Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO MSCI Global and Bitcoin ETF 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 ETF CAD are associated (or correlated) with BMO MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO MSCI Global has no effect on the direction of Bitcoin ETF i.e., Bitcoin ETF and BMO MSCI go up and down completely randomly.

Pair Corralation between Bitcoin ETF and BMO MSCI

Assuming the 90 days trading horizon Bitcoin ETF CAD is expected to under-perform the BMO MSCI. In addition to that, Bitcoin ETF is 3.82 times more volatile than BMO MSCI Global. It trades about -0.3 of its total potential returns per unit of risk. BMO MSCI Global is currently generating about -0.24 per unit of volatility. If you would invest  5,156  in BMO MSCI Global on December 4, 2024 and sell it today you would lose (164.00) from holding BMO MSCI Global or give up 3.18% of portfolio value over 90 days.

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

Bitcoin ETF CAD  vs.  BMO MSCI Global

Bitcoin ETF CAD

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin ETF CAD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

BMO MSCI Global

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Bitcoin ETF and BMO MSCI

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

The idea behind Bitcoin ETF CAD and BMO MSCI Global 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.