Correlation Between Bank Of Montreal and Franklin FTSE

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

By analyzing existing cross correlation between Bank Of Montreal and Franklin FTSE China, you can compare the effects of market volatilities on Bank Of Montreal and Franklin FTSE 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 Bank Of Montreal with a short position of Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Of Montreal and Franklin FTSE.

Diversification Opportunities for Bank Of Montreal and Franklin FTSE

0.83

Correlation Coefficient

Bank Of Montreal  Franklin FTSE

Very poor diversification

The 3 months correlation between Bank and Franklin is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of Montreal and Franklin FTSE China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE China and Bank Of Montreal 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 Bank Of Montreal are associated (or correlated) with Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE China has no effect on the direction of Bank Of Montreal i.e., Bank Of Montreal and Franklin FTSE go up and down completely randomly.

Pair Corralation between Bank Of Montreal and Franklin FTSE

Given the investment horizon of 90 days Bank Of Montreal is expected to generate 2.3 times more return on investment than Franklin FTSE. However, Bank Of Montreal is 2.3 times more volatile than Franklin FTSE China. It trades about 0.02 of its potential returns per unit of risk. Franklin FTSE China is currently generating about 0.0 per unit of risk. If you would invest  52,894  in Bank Of Montreal on October 10, 2024 and sell it today you would lose (2,646) from holding Bank Of Montreal or give up 5.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	77.58%
Values	Daily Returns

Bank Of Montreal  vs.  Franklin FTSE China

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 comparatively stable technical and fundamental indicators, Bank Of Montreal is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Franklin FTSE China

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin FTSE China has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Pair Trading with Bank Of Montreal and Franklin FTSE

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

The idea behind Bank Of Montreal and Franklin FTSE China 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..