Correlation Between BMO Dividend and Fidelity Dividend

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

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

Diversification Opportunities for BMO Dividend and Fidelity Dividend

0.9

Correlation Coefficient

BMO Dividend  Fidelity Dividend

Almost no diversification

The 3 months correlation between BMO and Fidelity is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding BMO Dividend ETF and Fidelity Dividend for in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Dividend for and BMO Dividend 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 Dividend ETF are associated (or correlated) with Fidelity Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Dividend for has no effect on the direction of BMO Dividend i.e., BMO Dividend and Fidelity Dividend go up and down completely randomly.

Pair Corralation between BMO Dividend and Fidelity Dividend

Assuming the 90 days trading horizon BMO Dividend ETF is expected to generate 0.87 times more return on investment than Fidelity Dividend. However, BMO Dividend ETF is 1.15 times less risky than Fidelity Dividend. It trades about 0.1 of its potential returns per unit of risk. Fidelity Dividend for is currently generating about 0.04 per unit of risk. If you would invest  4,701  in BMO Dividend ETF on December 1, 2024 and sell it today you would earn a total of  188.00  from holding BMO Dividend ETF or generate 4.0% return on investment over 90 days.

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

BMO Dividend ETF  vs.  Fidelity Dividend for

BMO Dividend ETF

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Dividend ETF are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, BMO Dividend is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Fidelity Dividend for

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Dividend for are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Fidelity Dividend 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 Dividend and Fidelity Dividend

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

The idea behind BMO Dividend ETF and Fidelity Dividend for 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.