Correlation Between IShares Global and BMO Global

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

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

Diversification Opportunities for IShares Global and BMO Global

0.92

Correlation Coefficient

IShares Global  BMO Global

Almost no diversification

The 3 months correlation between IShares and BMO is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Agriculture and BMO Global Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Global Communications and IShares Global 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 iShares Global Agriculture are associated (or correlated) with BMO Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Global Communications has no effect on the direction of IShares Global i.e., IShares Global and BMO Global go up and down completely randomly.

Pair Corralation between IShares Global and BMO Global

Assuming the 90 days trading horizon IShares Global is expected to generate 1.88 times less return on investment than BMO Global. In addition to that, IShares Global is 1.19 times more volatile than BMO Global Communications. It trades about 0.12 of its total potential returns per unit of risk. BMO Global Communications is currently generating about 0.26 per unit of volatility. If you would invest  3,885  in BMO Global Communications on April 23, 2025 and sell it today you would earn a total of  492.00  from holding BMO Global Communications or generate 12.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

iShares Global Agriculture  vs.  BMO Global Communications

iShares Global Agric

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Agriculture are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares Global may actually be approaching a critical reversion point that can send shares even higher in August 2025.

BMO Global Communications

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Global Communications are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BMO Global may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with IShares Global and BMO Global

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

The idea behind iShares Global Agriculture and BMO Global Communications 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.