Correlation Between BMO NASDAQ and CI Canada

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

By analyzing existing cross correlation between BMO NASDAQ 100 and CI Canada Quality, you can compare the effects of market volatilities on BMO NASDAQ and CI Canada 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 NASDAQ with a short position of CI Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO NASDAQ and CI Canada.

Diversification Opportunities for BMO NASDAQ and CI Canada

0.92

Correlation Coefficient

BMO NASDAQ  CI Canada

Almost no diversification

The 3 months correlation between BMO and DGRC is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding BMO NASDAQ 100 and CI Canada Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Canada Quality and BMO NASDAQ 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 NASDAQ 100 are associated (or correlated) with CI Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Canada Quality has no effect on the direction of BMO NASDAQ i.e., BMO NASDAQ and CI Canada go up and down completely randomly.

Pair Corralation between BMO NASDAQ and CI Canada

Assuming the 90 days trading horizon BMO NASDAQ is expected to generate 1.24 times less return on investment than CI Canada. In addition to that, BMO NASDAQ is 1.87 times more volatile than CI Canada Quality. It trades about 0.03 of its total potential returns per unit of risk. CI Canada Quality is currently generating about 0.07 per unit of volatility. If you would invest  3,691  in CI Canada Quality on April 4, 2025 and sell it today you would earn a total of  556.00  from holding CI Canada Quality or generate 15.06% return on investment over 90 days.

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

BMO NASDAQ 100  vs.  CI Canada Quality

BMO NASDAQ 100

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BMO NASDAQ 100 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BMO NASDAQ displayed solid returns over the last few months and may actually be approaching a breakup point.

CI Canada Quality

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Canada Quality are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CI Canada displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BMO NASDAQ and CI Canada

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

The idea behind BMO NASDAQ 100 and CI Canada Quality 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.