Correlation Between Bank of Montreal and SPDR SP

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

By analyzing existing cross correlation between Bank of Montreal and SPDR SP Semiconductor, you can compare the effects of market volatilities on Bank of Montreal and SPDR SP 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 Bank of Montreal with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Montreal and SPDR SP.

Diversification Opportunities for Bank of Montreal and SPDR SP

0.86

Correlation Coefficient

Bank of Montreal  SPDR SP

Very poor diversification

The 3 months correlation between Bank and SPDR is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Montreal and SPDR SP Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Semiconductor and Bank of Montreal 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 Bank of Montreal are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Semiconductor has no effect on the direction of Bank of Montreal i.e., Bank of Montreal and SPDR SP go up and down completely randomly.

Pair Corralation between Bank of Montreal and SPDR SP

Given the investment horizon of 90 days Bank of Montreal is expected to generate 2.33 times more return on investment than SPDR SP. However, Bank of Montreal is 2.33 times more volatile than SPDR SP Semiconductor. It trades about 0.11 of its potential returns per unit of risk. SPDR SP Semiconductor is currently generating about 0.23 per unit of risk. If you would invest  1,316  in Bank of Montreal on May 5, 2025 and sell it today you would earn a total of  373.00  from holding Bank of Montreal or generate 28.34% return on investment over 90 days.

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

Bank of Montreal  vs.  SPDR SP Semiconductor

Bank of Montreal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Montreal are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Bank of Montreal unveiled solid returns over the last few months and may actually be approaching a breakup point.

SPDR SP Semiconductor

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Semiconductor are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, SPDR SP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of Montreal and SPDR SP

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

The idea behind Bank of Montreal and SPDR SP Semiconductor 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.