Correlation Between BMO Equal and CI Global

Can any of the company-specific risk be diversified away by investing in both BMO Equal and CI Global 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 CI Global 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 CI Global Financial, you can compare the effects of market volatilities on BMO Equal and CI Global 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 CI Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Equal and CI Global.

Diversification Opportunities for BMO Equal and CI Global

0.78

Correlation Coefficient

BMO Equal  CI Global

Poor diversification

The 3 months correlation between BMO and FSF is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BMO Equal Weight and CI Global Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global Financial 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 CI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Global Financial has no effect on the direction of BMO Equal i.e., BMO Equal and CI Global go up and down completely randomly.

Pair Corralation between BMO Equal and CI Global

Assuming the 90 days trading horizon BMO Equal Weight is expected to generate 1.62 times more return on investment than CI Global. However, BMO Equal is 1.62 times more volatile than CI Global Financial. It trades about 0.26 of its potential returns per unit of risk. CI Global Financial is currently generating about 0.18 per unit of risk. If you would invest  2,800  in BMO Equal Weight on April 23, 2025 and sell it today you would earn a total of  696.00  from holding BMO Equal Weight or generate 24.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

BMO Equal Weight  vs.  CI Global Financial

BMO Equal Weight

Risk-Adjusted Performance

Solid

Over the last 90 days BMO Equal Weight has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak fundamental drivers, BMO Equal displayed solid returns over the last few months and may actually be approaching a breakup point.

CI Global Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CI Global Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, CI Global may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with BMO Equal and CI Global

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

The idea behind BMO Equal Weight and CI Global Financial 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.