Correlation Between BMO Laddered and CI Preferred

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Can any of the company-specific risk be diversified away by investing in both BMO Laddered and CI Preferred 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 Laddered and CI Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Laddered Preferred and CI Preferred Share, you can compare the effects of market volatilities on BMO Laddered and CI Preferred 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 Laddered with a short position of CI Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Laddered and CI Preferred.

Diversification Opportunities for BMO Laddered and CI Preferred

0.99
  Correlation Coefficient

No risk reduction

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

Pair Corralation between BMO Laddered and CI Preferred

Assuming the 90 days trading horizon BMO Laddered Preferred is expected to generate 0.62 times more return on investment than CI Preferred. However, BMO Laddered Preferred is 1.61 times less risky than CI Preferred. It trades about 0.73 of its potential returns per unit of risk. CI Preferred Share is currently generating about 0.35 per unit of risk. If you would invest  1,032  in BMO Laddered Preferred on April 21, 2025 and sell it today you would earn a total of  150.00  from holding BMO Laddered Preferred or generate 14.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

BMO Laddered Preferred  vs.  CI Preferred Share

 Performance 
       Timeline  
BMO Laddered Preferred 

Risk-Adjusted Performance

Market Crasher

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in BMO Laddered Preferred are ranked lower than 57 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BMO Laddered displayed solid returns over the last few months and may actually be approaching a breakup point.
CI Preferred Share 

Risk-Adjusted Performance

Strong

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in CI Preferred Share are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CI Preferred may actually be approaching a critical reversion point that can send shares even higher in August 2025.

BMO Laddered and CI Preferred Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BMO Laddered and CI Preferred

The main advantage of trading using opposite BMO Laddered and CI Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Laddered position performs unexpectedly, CI Preferred 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 Preferred will offset losses from the drop in CI Preferred's long position.
The idea behind BMO Laddered Preferred and CI Preferred Share 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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