Correlation Between AGRICULTBK HADR/25 and Bank of Montreal

Can any of the company-specific risk be diversified away by investing in both AGRICULTBK HADR/25 and Bank of Montreal 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 AGRICULTBK HADR/25 and Bank of Montreal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AGRICULTBK HADR25 YC and Bank of Montreal, you can compare the effects of market volatilities on AGRICULTBK HADR/25 and Bank of Montreal 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 AGRICULTBK HADR/25 with a short position of Bank of Montreal. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICULTBK HADR/25 and Bank of Montreal.

Diversification Opportunities for AGRICULTBK HADR/25 and Bank of Montreal

-0.31

Correlation Coefficient

AGRICULTBK HADR/25  Bank of Montreal

Very good diversification

The 3 months correlation between AGRICULTBK and Bank is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding AGRICULTBK HADR25 YC and Bank of Montreal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Montreal and AGRICULTBK HADR/25 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 AGRICULTBK HADR25 YC are associated (or correlated) with Bank of Montreal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Montreal has no effect on the direction of AGRICULTBK HADR/25 i.e., AGRICULTBK HADR/25 and Bank of Montreal go up and down completely randomly.

Pair Corralation between AGRICULTBK HADR/25 and Bank of Montreal

Assuming the 90 days trading horizon AGRICULTBK HADR25 YC is expected to generate 1.48 times more return on investment than Bank of Montreal. However, AGRICULTBK HADR/25 is 1.48 times more volatile than Bank of Montreal. It trades about 0.06 of its potential returns per unit of risk. Bank of Montreal is currently generating about -0.02 per unit of risk. If you would invest  1,278  in AGRICULTBK HADR25 YC on December 30, 2024 and sell it today you would earn a total of  82.00  from holding AGRICULTBK HADR25 YC or generate 6.42% return on investment over 90 days.

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

AGRICULTBK HADR25 YC  vs.  Bank of Montreal

AGRICULTBK HADR/25

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AGRICULTBK HADR25 YC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AGRICULTBK HADR/25 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Bank of Montreal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of Montreal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Bank of Montreal is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AGRICULTBK HADR/25 and Bank of Montreal

The main advantage of trading using opposite AGRICULTBK HADR/25 and Bank of Montreal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICULTBK HADR/25 position performs unexpectedly, Bank of Montreal 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 Bank of Montreal will offset losses from the drop in Bank of Montreal's long position.

The idea behind AGRICULTBK HADR25 YC and Bank of Montreal 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.