Correlation Between BMO Long and ValOre Metals

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

By analyzing existing cross correlation between BMO Long Corporate and ValOre Metals Corp, you can compare the effects of market volatilities on BMO Long and ValOre Metals 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 Long with a short position of ValOre Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Long and ValOre Metals.

Diversification Opportunities for BMO Long and ValOre Metals

-0.52

Correlation Coefficient

BMO Long  ValOre Metals

Excellent diversification

The 3 months correlation between BMO and ValOre is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding BMO Long Corporate and ValOre Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ValOre Metals Corp and BMO Long 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 Long Corporate are associated (or correlated) with ValOre Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ValOre Metals Corp has no effect on the direction of BMO Long i.e., BMO Long and ValOre Metals go up and down completely randomly.

Pair Corralation between BMO Long and ValOre Metals

Assuming the 90 days trading horizon BMO Long is expected to generate 10.82 times less return on investment than ValOre Metals. But when comparing it to its historical volatility, BMO Long Corporate is 12.58 times less risky than ValOre Metals. It trades about 0.03 of its potential returns per unit of risk. ValOre Metals Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  8.00  in ValOre Metals Corp on December 28, 2024 and sell it today you would lose (0.50) from holding ValOre Metals Corp or give up 6.25% of portfolio value over 90 days.

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

BMO Long Corporate  vs.  ValOre Metals Corp

BMO Long Corporate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Long Corporate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, BMO Long is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

ValOre Metals Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ValOre Metals Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, ValOre Metals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BMO Long and ValOre Metals

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

The idea behind BMO Long Corporate and ValOre Metals Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.