Correlation Between BMO Equal and Guardian International

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

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

Diversification Opportunities for BMO Equal and Guardian International

0.66

Correlation Coefficient

BMO Equal  Guardian International

Poor diversification

The 3 months correlation between BMO and Guardian is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding BMO Equal Weight and Guardian International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian International and BMO Equal 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 Equal Weight are associated (or correlated) with Guardian International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian International has no effect on the direction of BMO Equal i.e., BMO Equal and Guardian International go up and down completely randomly.

Pair Corralation between BMO Equal and Guardian International

Assuming the 90 days trading horizon BMO Equal Weight is expected to generate 3.1 times more return on investment than Guardian International. However, BMO Equal is 3.1 times more volatile than Guardian International Equity. It trades about 0.1 of its potential returns per unit of risk. Guardian International Equity is currently generating about 0.11 per unit of risk. If you would invest  14,490  in BMO Equal Weight on April 24, 2025 and sell it today you would earn a total of  1,890  from holding BMO Equal Weight or generate 13.04% return on investment over 90 days.

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

BMO Equal Weight  vs.  Guardian International Equity

BMO Equal Weight

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Equal Weight are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, BMO Equal displayed solid returns over the last few months and may actually be approaching a breakup point.

Guardian International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian International Equity are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Guardian International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BMO Equal and Guardian International

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

The idea behind BMO Equal Weight and Guardian International Equity 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.