Correlation Between Bank Of Montreal and IShares Core

Can any of the company-specific risk be diversified away by investing in both Bank Of Montreal and IShares Core 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 Bank Of Montreal and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank Of Montreal and iShares Core SP, you can compare the effects of market volatilities on Bank Of Montreal and IShares Core 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 Bank Of Montreal with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Of Montreal and IShares Core.

Diversification Opportunities for Bank Of Montreal and IShares Core

-0.54

Correlation Coefficient

Bank Of Montreal  IShares Core

Excellent diversification

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

Pair Corralation between Bank Of Montreal and IShares Core

If you would invest  11,535  in iShares Core SP on September 23, 2024 and sell it today you would earn a total of  48.00  from holding iShares Core SP or generate 0.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.54%
Values	Daily Returns

Bank Of Montreal  vs.  iShares Core SP

Bank Of Montreal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Of Montreal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Bank Of Montreal is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

iShares Core SP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking indicators, IShares Core is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bank Of Montreal and IShares Core

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

The idea behind Bank Of Montreal and iShares Core SP 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.