Correlation Between Forstrong Global and Hamilton Enhanced
Can any of the company-specific risk be diversified away by investing in both Forstrong Global 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 Forstrong Global and Hamilton Enhanced 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 Enhanced Canadian, you can compare the effects of market volatilities on Forstrong Global 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 Forstrong Global with a short position of Hamilton Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forstrong Global and Hamilton Enhanced.
Diversification Opportunities for Forstrong Global and Hamilton Enhanced
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Forstrong and Hamilton is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Income and Hamilton Enhanced Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Enhanced 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 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 Forstrong Global i.e., Forstrong Global and Hamilton Enhanced go up and down completely randomly.
Pair Corralation between Forstrong Global and Hamilton Enhanced
Assuming the 90 days trading horizon Forstrong Global is expected to generate 3.82 times less return on investment than Hamilton Enhanced. But when comparing it to its historical volatility, Forstrong Global Income is 2.66 times less risky than Hamilton Enhanced. It trades about 0.13 of its potential returns per unit of risk. Hamilton Enhanced Canadian is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,754 in Hamilton Enhanced Canadian on August 31, 2024 and sell it today you would earn a total of 787.00 from holding Hamilton Enhanced Canadian or generate 44.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Forstrong Global Income vs. Hamilton Enhanced Canadian
Performance |
| Timeline |
| Forstrong Global Income |
| Hamilton Enhanced |
Forstrong Global and Hamilton Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forstrong Global and Hamilton Enhanced
The main advantage of trading using opposite Forstrong Global and Hamilton Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forstrong Global 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.| Forstrong Global vs. Forstrong Global Ex North | Forstrong Global vs. Forstrong Global Growth | Forstrong Global vs. Forstrong Emerging Markets | Forstrong Global vs. NBI High Yield |
| Hamilton Enhanced vs. Forstrong Global Income | Hamilton Enhanced vs. iShares Canadian HYBrid | Hamilton Enhanced vs. Brompton European Dividend | Hamilton Enhanced vs. Solar Alliance Energy |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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