Correlation Between Rubicon Organics and BMO Aggregate
Can any of the company-specific risk be diversified away by investing in both Rubicon Organics and BMO Aggregate 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 Rubicon Organics and BMO Aggregate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rubicon Organics and BMO Aggregate Bond, you can compare the effects of market volatilities on Rubicon Organics and BMO Aggregate 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 Rubicon Organics with a short position of BMO Aggregate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rubicon Organics and BMO Aggregate.
Diversification Opportunities for Rubicon Organics and BMO Aggregate
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rubicon and BMO is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Organics and BMO Aggregate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Aggregate Bond and Rubicon Organics 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 Rubicon Organics are associated (or correlated) with BMO Aggregate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Aggregate Bond has no effect on the direction of Rubicon Organics i.e., Rubicon Organics and BMO Aggregate go up and down completely randomly.
Pair Corralation between Rubicon Organics and BMO Aggregate
Assuming the 90 days trading horizon Rubicon Organics is expected to generate 13.72 times more return on investment than BMO Aggregate. However, Rubicon Organics is 13.72 times more volatile than BMO Aggregate Bond. It trades about 0.4 of its potential returns per unit of risk. BMO Aggregate Bond is currently generating about -0.4 per unit of risk. If you would invest 37.00 in Rubicon Organics on October 9, 2024 and sell it today you would earn a total of 11.00 from holding Rubicon Organics or generate 29.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 94.44% |
Values | Daily Returns |
Rubicon Organics vs. BMO Aggregate Bond
Performance |
Timeline |
Rubicon Organics |
BMO Aggregate Bond |
Rubicon Organics and BMO Aggregate Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rubicon Organics and BMO Aggregate
The main advantage of trading using opposite Rubicon Organics and BMO Aggregate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rubicon Organics position performs unexpectedly, BMO Aggregate 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 BMO Aggregate will offset losses from the drop in BMO Aggregate's long position.The idea behind Rubicon Organics and BMO Aggregate Bond 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.BMO Aggregate vs. BMO Short Term Bond | BMO Aggregate vs. BMO Canadian Bank | BMO Aggregate vs. BMO Aggregate Bond | BMO Aggregate vs. BMO Balanced ETF |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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