Correlation Between Fidelity High and BMO High

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

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

Diversification Opportunities for Fidelity High and BMO High

0.99

Correlation Coefficient

Fidelity High  BMO High

No risk reduction

The 3 months correlation between Fidelity and BMO is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity High Dividend and BMO High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO High Dividend and Fidelity High 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 Fidelity High Dividend are associated (or correlated) with BMO High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO High Dividend has no effect on the direction of Fidelity High i.e., Fidelity High and BMO High go up and down completely randomly.

Pair Corralation between Fidelity High and BMO High

Assuming the 90 days trading horizon Fidelity High Dividend is expected to generate 1.1 times more return on investment than BMO High. However, Fidelity High is 1.1 times more volatile than BMO High Dividend. It trades about 0.27 of its potential returns per unit of risk. BMO High Dividend is currently generating about 0.25 per unit of risk. If you would invest  3,343  in Fidelity High Dividend on April 20, 2025 and sell it today you would earn a total of  490.00  from holding Fidelity High Dividend or generate 14.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Fidelity High Dividend  vs.  BMO High Dividend

Fidelity High Dividend

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity High Dividend are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Fidelity High displayed solid returns over the last few months and may actually be approaching a breakup point.

BMO High Dividend

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BMO High Dividend are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, BMO High may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Fidelity High and BMO High

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

The idea behind Fidelity High Dividend and BMO High Dividend 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.