Correlation Between BMO Ultra and CI Short

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

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

Diversification Opportunities for BMO Ultra and CI Short

0.0

Correlation Coefficient

BMO Ultra  CI Short

Pay attention - limited upside

The 3 months correlation between BMO and FGB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BMO Ultra Short Term and CI Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Short Term and BMO Ultra 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 Ultra Short Term are associated (or correlated) with CI Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Short Term has no effect on the direction of BMO Ultra i.e., BMO Ultra and CI Short go up and down completely randomly.

Pair Corralation between BMO Ultra and CI Short

If you would invest  4,775  in BMO Ultra Short Term on September 5, 2024 and sell it today you would earn a total of  119.00  from holding BMO Ultra Short Term or generate 2.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BMO Ultra Short Term  vs.  CI Short Term

BMO Ultra Short

Risk-Adjusted Performance

46 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Ultra Short Term are ranked lower than 46 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, BMO Ultra is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CI Short Term

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BMO Ultra and CI Short

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

The idea behind BMO Ultra Short Term and CI Short Term 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.