Correlation Between BMO Dividend and Fidelity High

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

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

Diversification Opportunities for BMO Dividend and Fidelity High

0.94

Correlation Coefficient

BMO Dividend  Fidelity High

Almost no diversification

The 3 months correlation between BMO and Fidelity is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding BMO Dividend Hedged and Fidelity High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity High Dividend and BMO Dividend 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 Dividend Hedged are associated (or correlated) with Fidelity High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity High Dividend has no effect on the direction of BMO Dividend i.e., BMO Dividend and Fidelity High go up and down completely randomly.

Pair Corralation between BMO Dividend and Fidelity High

Assuming the 90 days trading horizon BMO Dividend Hedged is expected to generate 0.9 times more return on investment than Fidelity High. However, BMO Dividend Hedged is 1.11 times less risky than Fidelity High. It trades about 0.23 of its potential returns per unit of risk. Fidelity High Dividend is currently generating about 0.2 per unit of risk. If you would invest  2,893  in BMO Dividend Hedged on April 24, 2025 and sell it today you would earn a total of  303.00  from holding BMO Dividend Hedged or generate 10.47% return on investment over 90 days.

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

BMO Dividend Hedged  vs.  Fidelity High Dividend

BMO Dividend Hedged

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Dividend Hedged are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, BMO Dividend may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Fidelity High Dividend

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity High Dividend are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Fidelity High may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with BMO Dividend and Fidelity High

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

The idea behind BMO Dividend Hedged and Fidelity High Dividend 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.