Correlation Between BMO Equal and TD Global

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

Diversification Opportunities for BMO Equal and TD Global

0.92

Correlation Coefficient

BMO Equal  TD Global

Almost no diversification

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

Pair Corralation between BMO Equal and TD Global

Assuming the 90 days trading horizon BMO Equal is expected to generate 2.57 times less return on investment than TD Global. But when comparing it to its historical volatility, BMO Equal Weight is 2.19 times less risky than TD Global. It trades about 0.33 of its potential returns per unit of risk. TD Global Technology is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  3,616  in TD Global Technology on April 21, 2025 and sell it today you would earn a total of  1,188  from holding TD Global Technology or generate 32.85% return on investment over 90 days.

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

BMO Equal Weight  vs.  TD Global Technology

BMO Equal Weight

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Equal Weight are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BMO Equal may actually be approaching a critical reversion point that can send shares even higher in August 2025.

TD Global Technology

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in TD Global Technology are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, TD Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BMO Equal and TD Global

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

The idea behind BMO Equal Weight and TD Global Technology 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.