Correlation Between BMO SPTSX and CI First

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

Diversification Opportunities for BMO SPTSX and CI First

0.48

Correlation Coefficient

BMO SPTSX  CI First

Very weak diversification

The 3 months correlation between BMO and MXF is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding BMO SPTSX Equal and CI First Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI First Asset 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 First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI First Asset has no effect on the direction of BMO SPTSX i.e., BMO SPTSX and CI First go up and down completely randomly.

Pair Corralation between BMO SPTSX and CI First

Assuming the 90 days trading horizon BMO SPTSX Equal is expected to generate 1.0 times more return on investment than CI First. However, BMO SPTSX is 1.0 times more volatile than CI First Asset. It trades about 0.06 of its potential returns per unit of risk. CI First Asset is currently generating about 0.03 per unit of risk. If you would invest  5,429  in BMO SPTSX Equal on September 1, 2024 and sell it today you would earn a total of  1,848  from holding BMO SPTSX Equal or generate 34.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.73%
Values	Daily Returns

BMO SPTSX Equal  vs.  CI First Asset

BMO SPTSX Equal

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BMO SPTSX Equal are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BMO SPTSX displayed solid returns over the last few months and may actually be approaching a breakup point.

CI First Asset

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CI First Asset are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, CI First 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 SPTSX and CI First

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

The idea behind BMO SPTSX Equal and CI First Asset 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.