Correlation Between BMO SPTSX and CI Gold

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

By analyzing existing cross correlation between BMO SPTSX Equal and CI Gold Giants, you can compare the effects of market volatilities on BMO SPTSX and CI Gold 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 SPTSX with a short position of CI Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO SPTSX and CI Gold.

Diversification Opportunities for BMO SPTSX and CI Gold

-0.59

Correlation Coefficient

BMO SPTSX  CI Gold

Excellent diversification

The 3 months correlation between BMO and CGXF is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding BMO SPTSX Equal and CI Gold Giants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Gold Giants and BMO SPTSX 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 SPTSX Equal are associated (or correlated) with CI Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Gold Giants has no effect on the direction of BMO SPTSX i.e., BMO SPTSX and CI Gold go up and down completely randomly.

Pair Corralation between BMO SPTSX and CI Gold

Assuming the 90 days trading horizon BMO SPTSX Equal is expected to under-perform the CI Gold. But the etf apears to be less risky and, when comparing its historical volatility, BMO SPTSX Equal is 2.04 times less risky than CI Gold. The etf trades about -0.09 of its potential returns per unit of risk. The CI Gold Giants is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1,029  in CI Gold Giants on December 21, 2024 and sell it today you would earn a total of  303.00  from holding CI Gold Giants or generate 29.45% return on investment over 90 days.

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

BMO SPTSX Equal  vs.  CI Gold Giants

BMO SPTSX Equal

Risk-Adjusted Performance

Very Weak

Over the last 90 days BMO SPTSX Equal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, BMO SPTSX is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CI Gold Giants

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Gold Giants are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, CI Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BMO SPTSX and CI Gold

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

The idea behind BMO SPTSX Equal and CI Gold Giants 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.