Correlation Between Vanguard Balanced and BMO Conservative

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

By analyzing existing cross correlation between Vanguard Balanced Portfolio and BMO Conservative ETF, you can compare the effects of market volatilities on Vanguard Balanced and BMO Conservative 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 Vanguard Balanced with a short position of BMO Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Balanced and BMO Conservative.

Diversification Opportunities for Vanguard Balanced and BMO Conservative

-0.75

Correlation Coefficient

Vanguard Balanced  BMO Conservative

Pay attention - limited upside

The 3 months correlation between Vanguard and BMO is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Balanced Portfolio and BMO Conservative ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Conservative ETF and Vanguard Balanced 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 Vanguard Balanced Portfolio are associated (or correlated) with BMO Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Conservative ETF has no effect on the direction of Vanguard Balanced i.e., Vanguard Balanced and BMO Conservative go up and down completely randomly.

Pair Corralation between Vanguard Balanced and BMO Conservative

Assuming the 90 days trading horizon Vanguard Balanced Portfolio is expected to generate 1.62 times more return on investment than BMO Conservative. However, Vanguard Balanced is 1.62 times more volatile than BMO Conservative ETF. It trades about 0.18 of its potential returns per unit of risk. BMO Conservative ETF is currently generating about 0.27 per unit of risk. If you would invest  3,626  in Vanguard Balanced Portfolio on July 28, 2025 and sell it today you would earn a total of  76.00  from holding Vanguard Balanced Portfolio or generate 2.1% return on investment over 90 days.

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

Vanguard Balanced Portfolio  vs.  BMO Conservative ETF

Vanguard Balanced

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Balanced Portfolio are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vanguard Balanced may actually be approaching a critical reversion point that can send shares even higher in November 2025.

BMO Conservative ETF

Risk-Adjusted Performance

Weakest

Over the last 90 days BMO Conservative ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in November 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Vanguard Balanced and BMO Conservative

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

The idea behind Vanguard Balanced Portfolio and BMO Conservative ETF 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.