Correlation Between Sun Peak and Bank of Montreal

Can any of the company-specific risk be diversified away by investing in both Sun Peak 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 Sun Peak 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 Sun Peak Metals and Bank of Montreal, you can compare the effects of market volatilities on Sun Peak 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 Sun Peak with a short position of Bank of Montreal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Peak and Bank of Montreal.

Diversification Opportunities for Sun Peak and Bank of Montreal

-0.15

Correlation Coefficient

Sun Peak  Bank of Montreal

Good diversification

The 3 months correlation between Sun and Bank is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sun Peak Metals 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 Sun Peak 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 Sun Peak Metals 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 Sun Peak i.e., Sun Peak and Bank of Montreal go up and down completely randomly.

Pair Corralation between Sun Peak and Bank of Montreal

Assuming the 90 days trading horizon Sun Peak Metals is expected to under-perform the Bank of Montreal. In addition to that, Sun Peak is 13.05 times more volatile than Bank of Montreal. It trades about -0.04 of its total potential returns per unit of risk. Bank of Montreal is currently generating about 0.14 per unit of volatility. If you would invest  2,567  in Bank of Montreal on October 8, 2024 and sell it today you would earn a total of  74.00  from holding Bank of Montreal or generate 2.88% return on investment over 90 days.

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

Sun Peak Metals  vs.  Bank of Montreal

Sun Peak Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Peak Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Bank of Montreal

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Montreal are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bank of Montreal is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sun Peak and Bank of Montreal

The main advantage of trading using opposite Sun Peak and Bank of Montreal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Peak 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 Sun Peak Metals 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.