Correlation Between Bank of Montreal and Capitol Series
Can any of the company-specific risk be diversified away by investing in both Bank of Montreal and Capitol Series 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 Capitol Series 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 Capitol Series Trust, you can compare the effects of market volatilities on Bank of Montreal and Capitol Series 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 Capitol Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Montreal and Capitol Series.
Diversification Opportunities for Bank of Montreal and Capitol Series
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Capitol is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Montreal and Capitol Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Series Trust 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 Capitol Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Series Trust has no effect on the direction of Bank of Montreal i.e., Bank of Montreal and Capitol Series go up and down completely randomly.
Pair Corralation between Bank of Montreal and Capitol Series
Given the investment horizon of 90 days Bank of Montreal is expected to generate 4.61 times more return on investment than Capitol Series. However, Bank of Montreal is 4.61 times more volatile than Capitol Series Trust. It trades about -0.01 of its potential returns per unit of risk. Capitol Series Trust is currently generating about -0.06 per unit of risk. If you would invest 2,612 in Bank of Montreal on December 27, 2024 and sell it today you would lose (97.00) from holding Bank of Montreal or give up 3.71% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 41.67% |
Values | Daily Returns |
Bank of Montreal vs. Capitol Series Trust
Performance |
Timeline |
Bank of Montreal |
Capitol Series Trust |
Bank of Montreal and Capitol Series Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of Montreal and Capitol Series
The main advantage of trading using opposite Bank of Montreal and Capitol Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Montreal position performs unexpectedly, Capitol Series 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 Capitol Series will offset losses from the drop in Capitol Series' long position.Bank of Montreal vs. Bank of Montreal | Bank of Montreal vs. Bank of Montreal | Bank of Montreal vs. MicroSectors FANG Index | Bank of Montreal vs. MicroSectors Solactive FANG |
Capitol Series vs. First Trust LongShort | Capitol Series vs. Cambria Global Momentum | Capitol Series vs. Cambria Global Asset | Capitol Series vs. ProShares Hedge Replication |
Check out your portfolio center.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.
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