Correlation Between BMO Global and Dynamic Active

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

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

Diversification Opportunities for BMO Global and Dynamic Active

0.61

Correlation Coefficient

BMO Global  Dynamic Active

Poor diversification

The 3 months correlation between BMO and Dynamic is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding BMO Global High and Dynamic Active Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Active Global and BMO Global 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 Global High are associated (or correlated) with Dynamic Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Active Global has no effect on the direction of BMO Global i.e., BMO Global and Dynamic Active go up and down completely randomly.

Pair Corralation between BMO Global and Dynamic Active

Assuming the 90 days trading horizon BMO Global High is expected to under-perform the Dynamic Active. In addition to that, BMO Global is 1.35 times more volatile than Dynamic Active Global. It trades about -0.01 of its total potential returns per unit of risk. Dynamic Active Global is currently generating about 0.0 per unit of volatility. If you would invest  2,563  in Dynamic Active Global on April 23, 2025 and sell it today you would lose (2.00) from holding Dynamic Active Global or give up 0.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.81%
Values	Daily Returns

BMO Global High  vs.  Dynamic Active Global

BMO Global High

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Global High are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, BMO Global may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Dynamic Active Global

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Active Global are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dynamic Active may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with BMO Global and Dynamic Active

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

The idea behind BMO Global High and Dynamic Active Global 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 Global Correlations module to find global opportunities by holding instruments from different markets.