Correlation Between BMO SP and Fidelity Greater

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

By analyzing existing cross correlation between BMO SP 500 and Fidelity Greater Canada, you can compare the effects of market volatilities on BMO SP and Fidelity Greater 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 SP with a short position of Fidelity Greater. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO SP and Fidelity Greater.

Diversification Opportunities for BMO SP and Fidelity Greater

0.0

Correlation Coefficient

BMO SP  Fidelity Greater

Pay attention - limited upside

The 3 months correlation between BMO and Fidelity is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BMO SP 500 and Fidelity Greater Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Greater Canada and BMO SP 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 SP 500 are associated (or correlated) with Fidelity Greater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Greater Canada has no effect on the direction of BMO SP i.e., BMO SP and Fidelity Greater go up and down completely randomly.

Pair Corralation between BMO SP and Fidelity Greater

If you would invest  7,786  in BMO SP 500 on April 20, 2025 and sell it today you would earn a total of  1,668  from holding BMO SP 500 or generate 21.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BMO SP 500  vs.  Fidelity Greater Canada

BMO SP 500

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in BMO SP 500 are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BMO SP displayed solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Greater Canada

Risk-Adjusted Performance

Solid

Over the last 90 days Fidelity Greater Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Fidelity Greater is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BMO SP and Fidelity Greater

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

The idea behind BMO SP 500 and Fidelity Greater Canada 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.