Correlation Between BMO Aggregate and Ninepoint Bitcoin

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

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

Diversification Opportunities for BMO Aggregate and Ninepoint Bitcoin

-0.24

Correlation Coefficient

BMO Aggregate  Ninepoint Bitcoin

Very good diversification

The 3 months correlation between BMO and Ninepoint is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Ninepoint Bitcoin ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ninepoint Bitcoin ETF and BMO Aggregate 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 Aggregate Bond are associated (or correlated) with Ninepoint Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ninepoint Bitcoin ETF has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Ninepoint Bitcoin go up and down completely randomly.

Pair Corralation between BMO Aggregate and Ninepoint Bitcoin

Assuming the 90 days trading horizon BMO Aggregate Bond is expected to generate 0.08 times more return on investment than Ninepoint Bitcoin. However, BMO Aggregate Bond is 13.15 times less risky than Ninepoint Bitcoin. It trades about 0.01 of its potential returns per unit of risk. Ninepoint Bitcoin ETF is currently generating about -0.14 per unit of risk. If you would invest  3,036  in BMO Aggregate Bond on December 4, 2024 and sell it today you would earn a total of  7.00  from holding BMO Aggregate Bond or generate 0.23% return on investment over 90 days.

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

BMO Aggregate Bond  vs.  Ninepoint Bitcoin ETF

BMO Aggregate Bond

Risk-Adjusted Performance

Very Weak

Over the last 90 days BMO Aggregate Bond has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BMO Aggregate is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Ninepoint Bitcoin ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ninepoint Bitcoin ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with BMO Aggregate and Ninepoint Bitcoin

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

The idea behind BMO Aggregate Bond and Ninepoint 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.