Correlation Between BMO Short and 3iQ Bitcoin

Can any of the company-specific risk be diversified away by investing in both BMO Short and 3iQ Bitcoin 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 Short and 3iQ Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BMO Short Term Bond and 3iQ Bitcoin ETF, you can compare the effects of market volatilities on BMO Short and 3iQ Bitcoin 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 Short with a short position of 3iQ Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Short and 3iQ Bitcoin.

Diversification Opportunities for BMO Short and 3iQ Bitcoin

0.59

Correlation Coefficient

BMO Short  3iQ Bitcoin

Very weak diversification

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

Pair Corralation between BMO Short and 3iQ Bitcoin

Assuming the 90 days trading horizon BMO Short is expected to generate 20.06 times less return on investment than 3iQ Bitcoin. But when comparing it to its historical volatility, BMO Short Term Bond is 17.15 times less risky than 3iQ Bitcoin. It trades about 0.1 of its potential returns per unit of risk. 3iQ Bitcoin ETF is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  429.00  in 3iQ Bitcoin ETF on October 4, 2024 and sell it today you would earn a total of  1,698  from holding 3iQ Bitcoin ETF or generate 395.8% return on investment over 90 days.

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

BMO Short Term Bond  vs.  3iQ Bitcoin ETF

BMO Short Term

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Short Term Bond are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, BMO Short is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

3iQ Bitcoin ETF

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 3iQ Bitcoin ETF are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, 3iQ Bitcoin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BMO Short and 3iQ Bitcoin

The main advantage of trading using opposite BMO Short and 3iQ Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Short position performs unexpectedly, 3iQ Bitcoin 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 3iQ Bitcoin will offset losses from the drop in 3iQ Bitcoin's long position.

The idea behind BMO Short Term Bond and 3iQ Bitcoin ETF 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.