Correlation Between BetaPro Crude and BMO Mid

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

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

Diversification Opportunities for BetaPro Crude and BMO Mid

-0.53

Correlation Coefficient

BetaPro Crude  BMO Mid

Excellent diversification

The 3 months correlation between BetaPro and BMO is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Crude Oil and BMO Mid Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Mid Federal and BetaPro Crude 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 BetaPro Crude Oil are associated (or correlated) with BMO Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Mid Federal has no effect on the direction of BetaPro Crude i.e., BetaPro Crude and BMO Mid go up and down completely randomly.

Pair Corralation between BetaPro Crude and BMO Mid

Assuming the 90 days trading horizon BetaPro Crude Oil is expected to generate 14.05 times more return on investment than BMO Mid. However, BetaPro Crude is 14.05 times more volatile than BMO Mid Federal. It trades about 0.07 of its potential returns per unit of risk. BMO Mid Federal is currently generating about -0.04 per unit of risk. If you would invest  965.00  in BetaPro Crude Oil on April 24, 2025 and sell it today you would earn a total of  135.00  from holding BetaPro Crude Oil or generate 13.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

BetaPro Crude Oil  vs.  BMO Mid Federal

BetaPro Crude Oil

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro Crude Oil are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BetaPro Crude displayed solid returns over the last few months and may actually be approaching a breakup point.

BMO Mid Federal

Risk-Adjusted Performance

Very Weak

Over the last 90 days BMO Mid Federal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, BMO Mid is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BetaPro Crude and BMO Mid

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

The idea behind BetaPro Crude Oil and BMO Mid Federal 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..