Correlation Between BMO Aggregate and Harvest Nvidia

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

Diversification Opportunities for BMO Aggregate and Harvest Nvidia

-0.69

Correlation Coefficient

BMO Aggregate  Harvest Nvidia

Excellent diversification

The 3 months correlation between BMO and Harvest is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Harvest Nvidia Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Nvidia Enhanced 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 Nvidia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Nvidia Enhanced has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Harvest Nvidia go up and down completely randomly.

Pair Corralation between BMO Aggregate and Harvest Nvidia

Assuming the 90 days trading horizon BMO Aggregate Bond is expected to generate 0.08 times more return on investment than Harvest Nvidia. However, BMO Aggregate Bond is 12.13 times less risky than Harvest Nvidia. It trades about 0.07 of its potential returns per unit of risk. Harvest Nvidia Enhanced is currently generating about -0.07 per unit of risk. If you would invest  1,382  in BMO Aggregate Bond on December 30, 2024 and sell it today you would earn a total of  21.00  from holding BMO Aggregate Bond or generate 1.52% return on investment over 90 days.

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

BMO Aggregate Bond  vs.  Harvest Nvidia Enhanced

BMO Aggregate Bond

Risk-Adjusted Performance

Modest

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.

Harvest Nvidia Enhanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harvest Nvidia Enhanced has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Etf's technical indicators remain somewhat 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.

Pair Trading with BMO Aggregate and Harvest Nvidia

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

The idea behind BMO Aggregate Bond and Harvest Nvidia Enhanced 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 Transaction History module to view history of all your transactions and understand their impact on performance.