Correlation Between BMO Junior and CI ONE

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

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

Diversification Opportunities for BMO Junior and CI ONE

0.45

Correlation Coefficient

BMO Junior  CI ONE

Very weak diversification

The 3 months correlation between BMO and ONEQ is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding BMO Junior Gold and CI ONE Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI ONE Global and BMO Junior 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 Junior Gold are associated (or correlated) with CI ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI ONE Global has no effect on the direction of BMO Junior i.e., BMO Junior and CI ONE go up and down completely randomly.

Pair Corralation between BMO Junior and CI ONE

Assuming the 90 days trading horizon BMO Junior Gold is expected to generate 1.91 times more return on investment than CI ONE. However, BMO Junior is 1.91 times more volatile than CI ONE Global. It trades about 0.13 of its potential returns per unit of risk. CI ONE Global is currently generating about 0.05 per unit of risk. If you would invest  11,482  in BMO Junior Gold on March 19, 2025 and sell it today you would earn a total of  2,175  from holding BMO Junior Gold or generate 18.94% return on investment over 90 days.

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

BMO Junior Gold  vs.  CI ONE Global

BMO Junior Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Junior Gold 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, BMO Junior displayed solid returns over the last few months and may actually be approaching a breakup point.

CI ONE Global

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CI ONE Global are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI ONE 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 Junior and CI ONE

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

The idea behind BMO Junior Gold and CI ONE Global 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.