Correlation Between BMO Balanced and CI Europe

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

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

Diversification Opportunities for BMO Balanced and CI Europe

0.77

Correlation Coefficient

BMO Balanced  CI Europe

Poor diversification

The 3 months correlation between BMO and EHE is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding BMO Balanced ETF and CI Europe Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Europe Hedged and BMO Balanced 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 Balanced ETF are associated (or correlated) with CI Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Europe Hedged has no effect on the direction of BMO Balanced i.e., BMO Balanced and CI Europe go up and down completely randomly.

Pair Corralation between BMO Balanced and CI Europe

Assuming the 90 days trading horizon BMO Balanced ETF is expected to generate 0.52 times more return on investment than CI Europe. However, BMO Balanced ETF is 1.92 times less risky than CI Europe. It trades about 0.26 of its potential returns per unit of risk. CI Europe Hedged is currently generating about 0.13 per unit of risk. If you would invest  3,908  in BMO Balanced ETF on April 24, 2025 and sell it today you would earn a total of  260.00  from holding BMO Balanced ETF or generate 6.65% return on investment over 90 days.

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

BMO Balanced ETF  vs.  CI Europe Hedged

BMO Balanced ETF

Risk-Adjusted Performance

Solid

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

CI Europe Hedged

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Europe Hedged are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, CI Europe may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with BMO Balanced and CI Europe

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

The idea behind BMO Balanced ETF and CI Europe Hedged 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.