Correlation Between BMO Aggregate and Rubellite Energy

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

Diversification Opportunities for BMO Aggregate and Rubellite Energy

0.34

Correlation Coefficient

BMO Aggregate  Rubellite Energy

Weak diversification

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

Pair Corralation between BMO Aggregate and Rubellite Energy

Assuming the 90 days trading horizon BMO Aggregate Bond is expected to under-perform the Rubellite Energy. But the etf apears to be less risky and, when comparing its historical volatility, BMO Aggregate Bond is 11.89 times less risky than Rubellite Energy. The etf trades about -0.16 of its potential returns per unit of risk. The Rubellite Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  225.00  in Rubellite Energy on October 9, 2024 and sell it today you would earn a total of  3.00  from holding Rubellite Energy or generate 1.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

BMO Aggregate Bond  vs.  Rubellite Energy

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.

Rubellite Energy

Risk-Adjusted Performance

1 of 100

Weak

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

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

The idea behind BMO Aggregate Bond and Rubellite Energy 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.