Correlation Between Forstrong Global and Hamilton Canadian
Can any of the company-specific risk be diversified away by investing in both Forstrong Global 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 Forstrong Global and Hamilton Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forstrong Global Income and Hamilton Canadian Bank, you can compare the effects of market volatilities on Forstrong Global 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 Forstrong Global with a short position of Hamilton Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forstrong Global and Hamilton Canadian.
Diversification Opportunities for Forstrong Global and Hamilton Canadian
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Forstrong and Hamilton is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Income 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 Forstrong Global 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 Forstrong Global Income 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 Forstrong Global i.e., Forstrong Global and Hamilton Canadian go up and down completely randomly.
Pair Corralation between Forstrong Global and Hamilton Canadian
Assuming the 90 days trading horizon Forstrong Global Income is expected to under-perform the Hamilton Canadian. But the etf apears to be less risky and, when comparing its historical volatility, Forstrong Global Income is 1.37 times less risky than Hamilton Canadian. The etf trades about -0.08 of its potential returns per unit of risk. The Hamilton Canadian Bank is currently generating about 0.54 of returns per unit of risk over similar time horizon. If you would invest 2,284 in Hamilton Canadian Bank on September 1, 2024 and sell it today you would earn a total of 135.00 from holding Hamilton Canadian Bank or generate 5.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forstrong Global Income vs. Hamilton Canadian Bank
Performance |
| Timeline |
| Forstrong Global Income |
| Hamilton Canadian Bank |
Forstrong Global and Hamilton Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forstrong Global and Hamilton Canadian
The main advantage of trading using opposite Forstrong Global and Hamilton Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forstrong Global 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.| Forstrong Global vs. iShares SPTSX 60 | Forstrong Global vs. iShares Core SP | Forstrong Global vs. iShares Core SPTSX | Forstrong Global vs. BMO Aggregate Bond |
| Hamilton Canadian vs. Hamilton Enhanced Canadian | Hamilton Canadian vs. Hamilton Enhanced Canadian | Hamilton Canadian vs. Hamilton Australian Bank | Hamilton Canadian vs. Hamilton Global Financials |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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