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 Utilities, 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
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Brompton and Hamilton is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Brompton European Dividend and Hamilton Enhanced Utilities 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 Dividend is expected to generate 0.96 times more return on investment than Hamilton Enhanced. However, Brompton European Dividend is 1.04 times less risky than Hamilton Enhanced. It trades about 0.06 of its potential returns per unit of risk. Hamilton Enhanced Utilities is currently generating about 0.02 per unit of risk. If you would invest 841.00 in Brompton European Dividend on December 1, 2024 and sell it today you would earn a total of 258.00 from holding Brompton European Dividend or generate 30.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brompton European Dividend vs. Hamilton Enhanced Utilities
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 |
| Hamilton Enhanced vs. Hamilton Enhanced Canadian | Hamilton Enhanced vs. Hamilton Enhanced Canadian | Hamilton Enhanced vs. Hamilton Canadian Financials | Hamilton Enhanced vs. Hamilton Enhanced Multi Sector |
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 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.
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