Correlation Between BMO SP and Mackenzie Global

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

By analyzing existing cross correlation between BMO SP 500 and Mackenzie Global Infrastructure, you can compare the effects of market volatilities on BMO SP and Mackenzie Global 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 SP with a short position of Mackenzie Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO SP and Mackenzie Global.

Diversification Opportunities for BMO SP and Mackenzie Global

-0.32

Correlation Coefficient

BMO SP  Mackenzie Global

Very good diversification

The 3 months correlation between BMO and Mackenzie is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BMO SP 500 and Mackenzie Global Infrastructur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Global Inf and BMO SP 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 SP 500 are associated (or correlated) with Mackenzie Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Global Inf has no effect on the direction of BMO SP i.e., BMO SP and Mackenzie Global go up and down completely randomly.

Pair Corralation between BMO SP and Mackenzie Global

Assuming the 90 days trading horizon BMO SP 500 is expected to under-perform the Mackenzie Global. In addition to that, BMO SP is 1.06 times more volatile than Mackenzie Global Infrastructure. It trades about -0.09 of its total potential returns per unit of risk. Mackenzie Global Infrastructure is currently generating about 0.1 per unit of volatility. If you would invest  13,718  in Mackenzie Global Infrastructure on December 30, 2024 and sell it today you would earn a total of  789.00  from holding Mackenzie Global Infrastructure or generate 5.75% return on investment over 90 days.

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

BMO SP 500  vs.  Mackenzie Global Infrastructur

BMO SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days BMO SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, BMO SP is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Mackenzie Global Inf

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Global Infrastructure are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Mackenzie Global 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 SP and Mackenzie Global

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

The idea behind BMO SP 500 and Mackenzie Global Infrastructure 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.