Correlation Between Bank Of Montreal and Cambria Value

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

Diversification Opportunities for Bank Of Montreal and Cambria Value

-0.6

Correlation Coefficient

Bank Of Montreal  Cambria Value

Excellent diversification

The 3 months correlation between Bank and Cambria is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of Montreal and Cambria Value and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Value 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 Cambria Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Value has no effect on the direction of Bank Of Montreal i.e., Bank Of Montreal and Cambria Value go up and down completely randomly.

Pair Corralation between Bank Of Montreal and Cambria Value

Given the investment horizon of 90 days Bank Of Montreal is expected to generate 4.39 times more return on investment than Cambria Value. However, Bank Of Montreal is 4.39 times more volatile than Cambria Value and. It trades about 0.02 of its potential returns per unit of risk. Cambria Value and is currently generating about 0.04 per unit of risk. If you would invest  49,000  in Bank Of Montreal on September 13, 2024 and sell it today you would earn a total of  1,248  from holding Bank Of Montreal or generate 2.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	80.77%
Values	Daily Returns

Bank Of Montreal  vs.  Cambria Value and

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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Cambria Value

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Value and are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Cambria Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bank Of Montreal and Cambria Value

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

The idea behind Bank Of Montreal and Cambria Value and 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.