Correlation Between Fidelity Dividend and BMO International

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

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

Diversification Opportunities for Fidelity Dividend and BMO International

-0.1

Correlation Coefficient

Fidelity Dividend  BMO International

Good diversification

The 3 months correlation between Fidelity and BMO is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Dividend for and BMO International Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO International and Fidelity Dividend 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 Fidelity Dividend for are associated (or correlated) with BMO International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO International has no effect on the direction of Fidelity Dividend i.e., Fidelity Dividend and BMO International go up and down completely randomly.

Pair Corralation between Fidelity Dividend and BMO International

Assuming the 90 days trading horizon Fidelity Dividend for is expected to generate 0.94 times more return on investment than BMO International. However, Fidelity Dividend for is 1.06 times less risky than BMO International. It trades about 0.22 of its potential returns per unit of risk. BMO International Dividend is currently generating about -0.02 per unit of risk. If you would invest  4,084  in Fidelity Dividend for on September 3, 2024 and sell it today you would earn a total of  421.00  from holding Fidelity Dividend for or generate 10.31% return on investment over 90 days.

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

Fidelity Dividend for  vs.  BMO International Dividend

Fidelity Dividend for

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Dividend for are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Fidelity Dividend may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BMO International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fidelity Dividend and BMO International

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

The idea behind Fidelity Dividend for and BMO International Dividend 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.