Correlation Between BMO Aggregate and Metallic Minerals

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

Diversification Opportunities for BMO Aggregate and Metallic Minerals

0.24

Correlation Coefficient

BMO Aggregate  Metallic Minerals

Modest diversification

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

Pair Corralation between BMO Aggregate and Metallic Minerals

Assuming the 90 days trading horizon BMO Aggregate is expected to generate 72.13 times less return on investment than Metallic Minerals. But when comparing it to its historical volatility, BMO Aggregate Bond is 23.15 times less risky than Metallic Minerals. It trades about 0.04 of its potential returns per unit of risk. Metallic Minerals Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Metallic Minerals Corp on October 23, 2024 and sell it today you would earn a total of  2.00  from holding Metallic Minerals Corp or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BMO Aggregate Bond  vs.  Metallic Minerals Corp

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.

Metallic Minerals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metallic Minerals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic 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 Metallic Minerals

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

The idea behind BMO Aggregate Bond and Metallic Minerals Corp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.