Correlation Between MicroSectors FANG and Bank Of Montreal

Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG 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 MicroSectors FANG 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 MicroSectors FANG Index and Bank Of Montreal, you can compare the effects of market volatilities on MicroSectors FANG 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 MicroSectors FANG with a short position of Bank Of Montreal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Bank Of Montreal.

Diversification Opportunities for MicroSectors FANG and Bank Of Montreal

-0.57

Correlation Coefficient

MicroSectors FANG  Bank Of Montreal

Excellent diversification

The 3 months correlation between MicroSectors and Bank is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index 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 MicroSectors FANG 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 MicroSectors FANG Index 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 MicroSectors FANG i.e., MicroSectors FANG and Bank Of Montreal go up and down completely randomly.

Pair Corralation between MicroSectors FANG and Bank Of Montreal

If you would invest  16,576  in Bank Of Montreal on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Bank Of Montreal or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	2.44%
Values	Daily Returns

MicroSectors FANG Index  vs.  Bank Of Montreal

MicroSectors FANG Index

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bank Of Montreal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Of Montreal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bank Of Montreal is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MicroSectors FANG and Bank Of Montreal

The main advantage of trading using opposite MicroSectors FANG and Bank Of Montreal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG 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 MicroSectors FANG Index 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.