Correlation Between Hamilton Australian and Hamilton MidSmall
Can any of the company-specific risk be diversified away by investing in both Hamilton Australian and Hamilton MidSmall 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 Hamilton Australian and Hamilton MidSmall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hamilton Australian Bank and Hamilton MidSmall Cap Financials, you can compare the effects of market volatilities on Hamilton Australian and Hamilton MidSmall 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 Hamilton Australian with a short position of Hamilton MidSmall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Australian and Hamilton MidSmall.
Diversification Opportunities for Hamilton Australian and Hamilton MidSmall
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hamilton and Hamilton is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Australian Bank and Hamilton MidSmall Cap Financia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton MidSmall Cap and Hamilton Australian 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 Hamilton Australian Bank are associated (or correlated) with Hamilton MidSmall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton MidSmall Cap has no effect on the direction of Hamilton Australian i.e., Hamilton Australian and Hamilton MidSmall go up and down completely randomly.
Pair Corralation between Hamilton Australian and Hamilton MidSmall
Assuming the 90 days trading horizon Hamilton Australian Bank is expected to under-perform the Hamilton MidSmall. In addition to that, Hamilton Australian is 1.13 times more volatile than Hamilton MidSmall Cap Financials. It trades about -0.04 of its total potential returns per unit of risk. Hamilton MidSmall Cap Financials is currently generating about -0.02 per unit of volatility. If you would invest 3,780 in Hamilton MidSmall Cap Financials on September 13, 2024 and sell it today you would lose (19.00) from holding Hamilton MidSmall Cap Financials or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hamilton Australian Bank vs. Hamilton MidSmall Cap Financia
Performance |
| Timeline |
| Hamilton Australian Bank |
| Hamilton MidSmall Cap |
Hamilton Australian and Hamilton MidSmall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hamilton Australian and Hamilton MidSmall
The main advantage of trading using opposite Hamilton Australian and Hamilton MidSmall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton Australian position performs unexpectedly, Hamilton MidSmall 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 MidSmall will offset losses from the drop in Hamilton MidSmall's long position.| Hamilton Australian vs. Hamilton Canadian Bank | Hamilton Australian vs. Hamilton Global Financials | Hamilton Australian vs. Hamilton Enhanced Canadian | Hamilton Australian vs. Hamilton Enhanced Canadian |
| Hamilton MidSmall vs. iShares SPTSX Capped | Hamilton MidSmall vs. iShares SPTSX Capped | Hamilton MidSmall vs. iShares SPTSX Global | Hamilton MidSmall vs. iShares SPTSX Capped |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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