Correlation Between Hamilton Australian and BMO Canadian
Can any of the company-specific risk be diversified away by investing in both Hamilton Australian and BMO 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 Hamilton Australian and BMO Canadian 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 BMO Canadian High, you can compare the effects of market volatilities on Hamilton Australian and BMO 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 Hamilton Australian with a short position of BMO Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Australian and BMO Canadian.
Diversification Opportunities for Hamilton Australian and BMO Canadian
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hamilton and BMO is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Australian Bank and BMO Canadian High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Canadian High 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 BMO Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Canadian High has no effect on the direction of Hamilton Australian i.e., Hamilton Australian and BMO Canadian go up and down completely randomly.
Pair Corralation between Hamilton Australian and BMO Canadian
Assuming the 90 days trading horizon Hamilton Australian Bank is expected to generate 1.92 times more return on investment than BMO Canadian. However, Hamilton Australian is 1.92 times more volatile than BMO Canadian High. It trades about 0.16 of its potential returns per unit of risk. BMO Canadian High is currently generating about 0.14 per unit of risk. If you would invest 2,051 in Hamilton Australian Bank on September 4, 2024 and sell it today you would earn a total of 940.00 from holding Hamilton Australian Bank or generate 45.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Hamilton Australian Bank vs. BMO Canadian High
Performance |
| Timeline |
| Hamilton Australian Bank |
| BMO Canadian High |
Hamilton Australian and BMO Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hamilton Australian and BMO Canadian
The main advantage of trading using opposite Hamilton Australian and BMO Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton Australian position performs unexpectedly, BMO 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 BMO Canadian will offset losses from the drop in BMO Canadian'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 |
| BMO Canadian vs. BMO Short Term Bond | BMO Canadian vs. BMO Canadian Bank | BMO Canadian vs. BMO Aggregate Bond | BMO Canadian vs. BMO Balanced ETF |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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