Correlation Between BMO Aggregate and Clear Blue

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

Diversification Opportunities for BMO Aggregate and Clear Blue

0.71

Correlation Coefficient

BMO Aggregate  Clear Blue

Poor diversification

The 3 months correlation between BMO and Clear is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Clear Blue Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clear Blue Technologies 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 Clear Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clear Blue Technologies has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Clear Blue go up and down completely randomly.

Pair Corralation between BMO Aggregate and Clear Blue

Assuming the 90 days trading horizon BMO Aggregate Bond is expected to under-perform the Clear Blue. But the etf apears to be less risky and, when comparing its historical volatility, BMO Aggregate Bond is 45.98 times less risky than Clear Blue. The etf trades about -0.39 of its potential returns per unit of risk. The Clear Blue Technologies is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1.50  in Clear Blue Technologies on October 7, 2024 and sell it today you would earn a total of  0.50  from holding Clear Blue Technologies or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

BMO Aggregate Bond  vs.  Clear Blue Technologies

BMO Aggregate Bond

Risk-Adjusted Performance

0 of 100

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.

Clear Blue Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clear Blue Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with BMO Aggregate and Clear Blue

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

The idea behind BMO Aggregate Bond and Clear Blue Technologies 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.