Correlation Between Desjardins Alt and Hamilton Enhanced
Can any of the company-specific risk be diversified away by investing in both Desjardins Alt and Hamilton Enhanced 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 Desjardins Alt and Hamilton Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desjardins Alt LongShort and Hamilton Enhanced Covered, you can compare the effects of market volatilities on Desjardins Alt and Hamilton Enhanced 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 Desjardins Alt with a short position of Hamilton Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins Alt and Hamilton Enhanced.
Diversification Opportunities for Desjardins Alt and Hamilton Enhanced
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Desjardins and Hamilton is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins Alt LongShort and Hamilton Enhanced Covered in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Enhanced Covered and Desjardins Alt 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 Desjardins Alt LongShort are associated (or correlated) with Hamilton Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Enhanced Covered has no effect on the direction of Desjardins Alt i.e., Desjardins Alt and Hamilton Enhanced go up and down completely randomly.
Pair Corralation between Desjardins Alt and Hamilton Enhanced
Assuming the 90 days trading horizon Desjardins Alt is expected to generate 10.35 times less return on investment than Hamilton Enhanced. But when comparing it to its historical volatility, Desjardins Alt LongShort is 7.33 times less risky than Hamilton Enhanced. It trades about 0.09 of its potential returns per unit of risk. Hamilton Enhanced Covered is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,209 in Hamilton Enhanced Covered on November 3, 2024 and sell it today you would earn a total of 210.00 from holding Hamilton Enhanced Covered or generate 17.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Desjardins Alt LongShort vs. Hamilton Enhanced Covered
Performance |
| Timeline |
| Desjardins Alt LongShort |
| Hamilton Enhanced Covered |
Desjardins Alt and Hamilton Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desjardins Alt and Hamilton Enhanced
The main advantage of trading using opposite Desjardins Alt and Hamilton Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desjardins Alt position performs unexpectedly, Hamilton Enhanced 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 Hamilton Enhanced will offset losses from the drop in Hamilton Enhanced's long position.| Desjardins Alt vs. AGFiQ Market Neutral | Desjardins Alt vs. Desjardins RI Canada | Desjardins Alt vs. NBI Liquid Alternatives | Desjardins Alt vs. Desjardins RI USA |
| Hamilton Enhanced vs. Hamilton Enhanced Multi Sector | Hamilton Enhanced vs. Harvest Diversified Monthly | Hamilton Enhanced vs. Hamilton Canadian Financials | Hamilton Enhanced vs. Global Dividend Growth |
Check out your portfolio center.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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