Correlation Between Brompton European and Hamilton Enhanced
Can any of the company-specific risk be diversified away by investing in both Brompton European 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 Brompton European and Hamilton Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brompton European Dividend and Hamilton Enhanced Canadian, you can compare the effects of market volatilities on Brompton European 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 Brompton European with a short position of Hamilton Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton European and Hamilton Enhanced.
Diversification Opportunities for Brompton European and Hamilton Enhanced
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Brompton and Hamilton is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Brompton European Dividend and Hamilton Enhanced Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Enhanced and Brompton European 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 Brompton European Dividend 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 has no effect on the direction of Brompton European i.e., Brompton European and Hamilton Enhanced go up and down completely randomly.
Pair Corralation between Brompton European and Hamilton Enhanced
Assuming the 90 days trading horizon Brompton European is expected to generate 2.05 times less return on investment than Hamilton Enhanced. In addition to that, Brompton European is 1.27 times more volatile than Hamilton Enhanced Canadian. It trades about 0.07 of its total potential returns per unit of risk. Hamilton Enhanced Canadian is currently generating about 0.19 per unit of volatility. If you would invest 1,747 in Hamilton Enhanced Canadian on September 2, 2024 and sell it today you would earn a total of 794.00 from holding Hamilton Enhanced Canadian or generate 45.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brompton European Dividend vs. Hamilton Enhanced Canadian
Performance |
| Timeline |
| Brompton European |
| Hamilton Enhanced |
Brompton European and Hamilton Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton European and Hamilton Enhanced
The main advantage of trading using opposite Brompton European and Hamilton Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton European 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.| Brompton European vs. Brompton Global Dividend | Brompton European vs. Global Healthcare Income | Brompton European vs. Tech Leaders Income | Brompton European vs. Brompton North American |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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