Correlation Between Blockchain Technologies and BMO MSCI

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

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

Diversification Opportunities for Blockchain Technologies and BMO MSCI

0.79

Correlation Coefficient

Blockchain Technologies  BMO MSCI

Poor diversification

The 3 months correlation between Blockchain and BMO is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Blockchain Technologies ETF and BMO MSCI All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO MSCI All and Blockchain Technologies 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 Blockchain Technologies ETF 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 All has no effect on the direction of Blockchain Technologies i.e., Blockchain Technologies and BMO MSCI go up and down completely randomly.

Pair Corralation between Blockchain Technologies and BMO MSCI

Assuming the 90 days trading horizon Blockchain Technologies ETF is expected to generate 4.3 times more return on investment than BMO MSCI. However, Blockchain Technologies is 4.3 times more volatile than BMO MSCI All. It trades about 0.2 of its potential returns per unit of risk. BMO MSCI All is currently generating about 0.18 per unit of risk. If you would invest  1,448  in Blockchain Technologies ETF on September 4, 2024 and sell it today you would earn a total of  628.00  from holding Blockchain Technologies ETF or generate 43.37% return on investment over 90 days.

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

Blockchain Technologies ETF  vs.  BMO MSCI All

Blockchain Technologies

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blockchain Technologies ETF are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Blockchain Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

BMO MSCI All

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BMO MSCI All are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BMO MSCI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blockchain Technologies and BMO MSCI

The main advantage of trading using opposite Blockchain Technologies and BMO MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blockchain Technologies 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 Blockchain Technologies ETF and BMO MSCI All 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..