Correlation Between BMO Aggregate and McChip Resources

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

Diversification Opportunities for BMO Aggregate and McChip Resources

-0.05

Correlation Coefficient

BMO Aggregate  McChip Resources

Good diversification

The 3 months correlation between BMO and McChip is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and McChip Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McChip Resources 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 McChip Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McChip Resources has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and McChip Resources go up and down completely randomly.

Pair Corralation between BMO Aggregate and McChip Resources

Assuming the 90 days trading horizon BMO Aggregate Bond is expected to under-perform the McChip Resources. But the etf apears to be less risky and, when comparing its historical volatility, BMO Aggregate Bond is 21.69 times less risky than McChip Resources. The etf trades about -0.18 of its potential returns per unit of risk. The McChip Resources is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  66.00  in McChip Resources on October 10, 2024 and sell it today you would lose (3.00) from holding McChip Resources or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

BMO Aggregate Bond  vs.  McChip Resources

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.

McChip Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days McChip Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, McChip Resources is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with BMO Aggregate and McChip Resources

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

The idea behind BMO Aggregate Bond and McChip Resources 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.