Correlation Between BMO Aggregate and Sun Peak

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

Diversification Opportunities for BMO Aggregate and Sun Peak

0.34

Correlation Coefficient

BMO Aggregate  Sun Peak

Weak diversification

The 3 months correlation between BMO and Sun is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak Metals 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 Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Sun Peak go up and down completely randomly.

Pair Corralation between BMO Aggregate and Sun Peak

Assuming the 90 days trading horizon BMO Aggregate Bond is expected to under-perform the Sun Peak. But the etf apears to be less risky and, when comparing its historical volatility, BMO Aggregate Bond is 18.91 times less risky than Sun Peak. The etf trades about -0.4 of its potential returns per unit of risk. The Sun Peak Metals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  32.00  in Sun Peak Metals on October 9, 2024 and sell it today you would earn a total of  1.00  from holding Sun Peak Metals or generate 3.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

BMO Aggregate Bond  vs.  Sun Peak Metals

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.

Sun Peak Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Peak Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sun Peak 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 Sun Peak

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

The idea behind BMO Aggregate Bond and Sun Peak Metals 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.