Correlation Between Hamilton Australian and BMO Covered
Can any of the company-specific risk be diversified away by investing in both Hamilton Australian and BMO Covered 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 Covered 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 Covered Call, you can compare the effects of market volatilities on Hamilton Australian and BMO Covered 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 Covered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Australian and BMO Covered.
Diversification Opportunities for Hamilton Australian and BMO Covered
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hamilton and BMO is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Australian Bank and BMO Covered Call in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Covered Call 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 Covered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Covered Call has no effect on the direction of Hamilton Australian i.e., Hamilton Australian and BMO Covered go up and down completely randomly.
Pair Corralation between Hamilton Australian and BMO Covered
Assuming the 90 days trading horizon Hamilton Australian Bank is expected to generate 1.7 times more return on investment than BMO Covered. However, Hamilton Australian is 1.7 times more volatile than BMO Covered Call. It trades about 0.33 of its potential returns per unit of risk. BMO Covered Call is currently generating about 0.22 per unit of risk. If you would invest 2,817 in Hamilton Australian Bank on September 2, 2024 and sell it today you would earn a total of 164.00 from holding Hamilton Australian Bank or generate 5.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hamilton Australian Bank vs. BMO Covered Call
Performance |
| Timeline |
| Hamilton Australian Bank |
| BMO Covered Call |
Hamilton Australian and BMO Covered Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hamilton Australian and BMO Covered
The main advantage of trading using opposite Hamilton Australian and BMO Covered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton Australian position performs unexpectedly, BMO Covered 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 Covered will offset losses from the drop in BMO Covered's long position.| Hamilton Australian vs. BMO Canadian Dividend | Hamilton Australian vs. BMO Covered Call | Hamilton Australian vs. BMO Canadian High | Hamilton Australian vs. BMO NASDAQ 100 |
| BMO Covered vs. BMO Covered Call | BMO Covered vs. BMO Canadian High | BMO Covered vs. BMO Europe High | BMO Covered vs. Harvest Healthcare Leaders |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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