Correlation Between Hamilton Canadian and Purpose Canadian
Can any of the company-specific risk be diversified away by investing in both Hamilton Canadian and Purpose 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 Canadian and Purpose Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hamilton Canadian Bank and Purpose Canadian Financial, you can compare the effects of market volatilities on Hamilton Canadian and Purpose 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 Canadian with a short position of Purpose Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Canadian and Purpose Canadian.
Diversification Opportunities for Hamilton Canadian and Purpose Canadian
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hamilton and Purpose is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Canadian Bank and Purpose Canadian Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose Canadian Fin and Hamilton Canadian 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 Canadian Bank are associated (or correlated) with Purpose Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose Canadian Fin has no effect on the direction of Hamilton Canadian i.e., Hamilton Canadian and Purpose Canadian go up and down completely randomly.
Pair Corralation between Hamilton Canadian and Purpose Canadian
Assuming the 90 days trading horizon Hamilton Canadian is expected to generate 1.19 times less return on investment than Purpose Canadian. In addition to that, Hamilton Canadian is 1.19 times more volatile than Purpose Canadian Financial. It trades about 0.07 of its total potential returns per unit of risk. Purpose Canadian Financial is currently generating about 0.09 per unit of volatility. If you would invest 2,162 in Purpose Canadian Financial on August 30, 2024 and sell it today you would earn a total of 786.00 from holding Purpose Canadian Financial or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hamilton Canadian Bank vs. Purpose Canadian Financial
Performance |
| Timeline |
| Hamilton Canadian Bank |
| Purpose Canadian Fin |
Hamilton Canadian and Purpose Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hamilton Canadian and Purpose Canadian
The main advantage of trading using opposite Hamilton Canadian and Purpose Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton Canadian position performs unexpectedly, Purpose 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 Purpose Canadian will offset losses from the drop in Purpose Canadian's long position.| Hamilton Canadian vs. BMO Global High | Hamilton Canadian vs. BMO Covered Call | Hamilton Canadian vs. BMO Europe High | Hamilton Canadian vs. Forstrong Global Income |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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