Correlation Between T Rex and Bank of Montreal

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

By analyzing existing cross correlation between T Rex 2X Long and Bank of Montreal, you can compare the effects of market volatilities on T Rex and Bank of Montreal 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 T Rex with a short position of Bank of Montreal. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and Bank of Montreal.

Diversification Opportunities for T Rex and Bank of Montreal

-0.64

Correlation Coefficient

T Rex  Bank of Montreal

Excellent diversification

The 3 months correlation between NVDX and Bank is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long and Bank of Montreal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Montreal and T Rex 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 T Rex 2X Long are associated (or correlated) with Bank of Montreal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Montreal has no effect on the direction of T Rex i.e., T Rex and Bank of Montreal go up and down completely randomly.

Pair Corralation between T Rex and Bank of Montreal

Given the investment horizon of 90 days T Rex 2X Long is expected to under-perform the Bank of Montreal. In addition to that, T Rex is 2.19 times more volatile than Bank of Montreal. It trades about -0.06 of its total potential returns per unit of risk. Bank of Montreal is currently generating about 0.1 per unit of volatility. If you would invest  1,168  in Bank of Montreal on December 27, 2024 and sell it today you would earn a total of  248.00  from holding Bank of Montreal or generate 21.23% return on investment over 90 days.

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

T Rex 2X Long  vs.  Bank of Montreal

T Rex 2X

Risk-Adjusted Performance

Very Weak

Over the last 90 days T Rex 2X Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Bank of Montreal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Montreal are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Bank of Montreal exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with T Rex and Bank of Montreal

The main advantage of trading using opposite T Rex and Bank of Montreal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex position performs unexpectedly, Bank of Montreal 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 Bank of Montreal will offset losses from the drop in Bank of Montreal's long position.

The idea behind T Rex 2X Long and Bank of Montreal 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.