Correlation Between BMO Aggregate and PetroFrontier Corp

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

Diversification Opportunities for BMO Aggregate and PetroFrontier Corp

0.54

Correlation Coefficient

BMO Aggregate  PetroFrontier Corp

Very weak diversification

The 3 months correlation between BMO and PetroFrontier is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and PetroFrontier Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroFrontier 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 PetroFrontier Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroFrontier Corp has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and PetroFrontier Corp go up and down completely randomly.

Pair Corralation between BMO Aggregate and PetroFrontier Corp

Assuming the 90 days trading horizon BMO Aggregate Bond is expected to under-perform the PetroFrontier Corp. But the etf apears to be less risky and, when comparing its historical volatility, BMO Aggregate Bond is 29.88 times less risky than PetroFrontier Corp. The etf trades about 0.0 of its potential returns per unit of risk. The PetroFrontier Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7.00  in PetroFrontier Corp on October 11, 2024 and sell it today you would lose (4.00) from holding PetroFrontier Corp or give up 57.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

BMO Aggregate Bond  vs.  PetroFrontier 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.

PetroFrontier Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PetroFrontier Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, PetroFrontier Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BMO Aggregate and PetroFrontier Corp

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

The idea behind BMO Aggregate Bond and PetroFrontier 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 CEOs Directory module to screen CEOs from public companies around the world.