Correlation Between BMO Aggregate and Harvest Eli

Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Harvest Eli 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 Harvest Eli 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 Harvest Eli Lilly, you can compare the effects of market volatilities on BMO Aggregate and Harvest Eli 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 Harvest Eli. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Harvest Eli.

Diversification Opportunities for BMO Aggregate and Harvest Eli

0.77

Correlation Coefficient

BMO Aggregate  Harvest Eli

Poor diversification

The 3 months correlation between BMO and Harvest is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Harvest Eli Lilly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Eli Lilly 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 Harvest Eli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Eli Lilly has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Harvest Eli go up and down completely randomly.

Pair Corralation between BMO Aggregate and Harvest Eli

Assuming the 90 days trading horizon BMO Aggregate is expected to generate 5.79 times less return on investment than Harvest Eli. But when comparing it to its historical volatility, BMO Aggregate Bond is 4.69 times less risky than Harvest Eli. It trades about 0.09 of its potential returns per unit of risk. Harvest Eli Lilly is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  934.00  in Harvest Eli Lilly on December 3, 2024 and sell it today you would earn a total of  103.00  from holding Harvest Eli Lilly or generate 11.03% return on investment over 90 days.

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

BMO Aggregate Bond  vs.  Harvest Eli Lilly

BMO Aggregate Bond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Aggregate Bond are ranked lower than 6 (%) 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.

Harvest Eli Lilly

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Eli Lilly are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical indicators, Harvest Eli may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BMO Aggregate and Harvest Eli

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

The idea behind BMO Aggregate Bond and Harvest Eli Lilly 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.