Correlation Between BMO Aggregate and Platinum Group

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

Diversification Opportunities for BMO Aggregate and Platinum Group

-0.33

Correlation Coefficient

BMO Aggregate  Platinum Group

Very good diversification

The 3 months correlation between BMO and Platinum is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Platinum Group Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Group 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 Platinum Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Group Metals has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Platinum Group go up and down completely randomly.

Pair Corralation between BMO Aggregate and Platinum Group

Assuming the 90 days trading horizon BMO Aggregate is expected to generate 2.26 times less return on investment than Platinum Group. But when comparing it to its historical volatility, BMO Aggregate Bond is 12.5 times less risky than Platinum Group. It trades about 0.1 of its potential returns per unit of risk. Platinum Group Metals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  184.00  in Platinum Group Metals on December 23, 2024 and sell it today you would lose (1.00) from holding Platinum Group Metals or give up 0.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BMO Aggregate Bond  vs.  Platinum Group Metals

BMO Aggregate Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Aggregate Bond are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. 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.

Platinum Group Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Group Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Platinum Group is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BMO Aggregate and Platinum Group

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

The idea behind BMO Aggregate Bond and Platinum Group 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.