Correlation Between BMO Aggregate and Exemplar Growth

Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Exemplar Growth 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 BMO Aggregate and Exemplar Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BMO Aggregate Bond and Exemplar Growth and, you can compare the effects of market volatilities on BMO Aggregate and Exemplar Growth 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 BMO Aggregate with a short position of Exemplar Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Exemplar Growth.

Diversification Opportunities for BMO Aggregate and Exemplar Growth

0.55

Correlation Coefficient

BMO Aggregate  Exemplar Growth

Very weak diversification

The 3 months correlation between BMO and Exemplar is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Exemplar Growth and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exemplar Growth and BMO Aggregate 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 BMO Aggregate Bond are associated (or correlated) with Exemplar Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exemplar Growth has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Exemplar Growth go up and down completely randomly.

Pair Corralation between BMO Aggregate and Exemplar Growth

Assuming the 90 days trading horizon BMO Aggregate Bond is expected to under-perform the Exemplar Growth. In addition to that, BMO Aggregate is 1.3 times more volatile than Exemplar Growth and. It trades about -0.2 of its total potential returns per unit of risk. Exemplar Growth and is currently generating about -0.19 per unit of volatility. If you would invest  2,283  in Exemplar Growth and on October 8, 2024 and sell it today you would lose (20.00) from holding Exemplar Growth and or give up 0.88% of portfolio value over 90 days.

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

BMO Aggregate Bond  vs.  Exemplar Growth and

BMO Aggregate Bond

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Aggregate Bond are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, BMO Aggregate is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Exemplar Growth

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exemplar Growth and are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Exemplar Growth is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BMO Aggregate and Exemplar Growth

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

The idea behind BMO Aggregate Bond and Exemplar Growth 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.