Correlation Between Desjardins and Hamilton Canadian
Can any of the company-specific risk be diversified away by investing in both Desjardins and Hamilton Canadian 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 and Hamilton Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desjardins RI Global and Hamilton Canadian Bank, you can compare the effects of market volatilities on Desjardins and Hamilton Canadian 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 with a short position of Hamilton Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins and Hamilton Canadian.
Diversification Opportunities for Desjardins and Hamilton Canadian
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Desjardins and Hamilton is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins RI Global and Hamilton Canadian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Canadian Bank and Desjardins 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 RI Global are associated (or correlated) with Hamilton Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Canadian Bank has no effect on the direction of Desjardins i.e., Desjardins and Hamilton Canadian go up and down completely randomly.
Pair Corralation between Desjardins and Hamilton Canadian
Assuming the 90 days trading horizon Desjardins is expected to generate 1.28 times less return on investment than Hamilton Canadian. In addition to that, Desjardins is 1.26 times more volatile than Hamilton Canadian Bank. It trades about 0.23 of its total potential returns per unit of risk. Hamilton Canadian Bank is currently generating about 0.37 per unit of volatility. If you would invest 2,316 in Hamilton Canadian Bank on August 28, 2024 and sell it today you would earn a total of 95.00 from holding Hamilton Canadian Bank or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Desjardins RI Global vs. Hamilton Canadian Bank
Performance |
| Timeline |
| Desjardins RI Global |
| Hamilton Canadian Bank |
Desjardins and Hamilton Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desjardins and Hamilton Canadian
The main advantage of trading using opposite Desjardins and Hamilton Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desjardins position performs unexpectedly, Hamilton Canadian 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 Canadian will offset losses from the drop in Hamilton Canadian's long position.| Desjardins vs. Vanguard FTSE Canada | Desjardins vs. Vanguard Canadian Aggregate | Desjardins vs. Vanguard Total Market | Desjardins vs. Vanguard FTSE Emerging |
| Hamilton Canadian vs. Brompton Global Dividend | Hamilton Canadian vs. Tech Leaders Income | Hamilton Canadian vs. Global Healthcare Income | Hamilton Canadian vs. Brompton European Dividend |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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