Correlation Between Bank of Montreal and IShares Silver

Can any of the company-specific risk be diversified away by investing in both Bank of Montreal and IShares Silver 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 IShares Silver 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 iShares Silver Trust, you can compare the effects of market volatilities on Bank of Montreal and IShares Silver 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 IShares Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Montreal and IShares Silver.

Diversification Opportunities for Bank of Montreal and IShares Silver

-0.36

Correlation Coefficient

Bank of Montreal  IShares Silver

Very good diversification

The 3 months correlation between Bank and IShares is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Montreal and iShares Silver Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Silver 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 IShares Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Silver Trust has no effect on the direction of Bank of Montreal i.e., Bank of Montreal and IShares Silver go up and down completely randomly.

Pair Corralation between Bank of Montreal and IShares Silver

Given the investment horizon of 90 days Bank of Montreal is expected to under-perform the IShares Silver. In addition to that, Bank of Montreal is 3.82 times more volatile than iShares Silver Trust. It trades about -0.03 of its total potential returns per unit of risk. iShares Silver Trust is currently generating about 0.23 per unit of volatility. If you would invest  2,643  in iShares Silver Trust on December 28, 2024 and sell it today you would earn a total of  489.00  from holding iShares Silver Trust or generate 18.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	43.33%
Values	Daily Returns

Bank of Montreal  vs.  iShares Silver Trust

Bank of Montreal

Risk-Adjusted Performance

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 latest unsteady performance, the Etf's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

iShares Silver Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Silver Trust are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, IShares Silver showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of Montreal and IShares Silver

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

The idea behind Bank of Montreal and iShares Silver Trust 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.