Correlation Between Hamilton Canadian and Hamilton MidSmall
Can any of the company-specific risk be diversified away by investing in both Hamilton Canadian 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 Canadian 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 Canadian Bank and Hamilton MidSmall Cap Financials, you can compare the effects of market volatilities on Hamilton Canadian 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 Canadian with a short position of Hamilton MidSmall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Canadian and Hamilton MidSmall.
Diversification Opportunities for Hamilton Canadian and Hamilton MidSmall
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hamilton and Hamilton is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Canadian 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 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 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 Canadian i.e., Hamilton Canadian and Hamilton MidSmall go up and down completely randomly.
Pair Corralation between Hamilton Canadian and Hamilton MidSmall
Assuming the 90 days trading horizon Hamilton Canadian is expected to generate 1.98 times less return on investment than Hamilton MidSmall. But when comparing it to its historical volatility, Hamilton Canadian Bank is 4.48 times less risky than Hamilton MidSmall. It trades about 0.54 of its potential returns per unit of risk. Hamilton MidSmall Cap Financials is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,486 in Hamilton MidSmall Cap Financials on September 1, 2024 and sell it today you would earn a total of 402.00 from holding Hamilton MidSmall Cap Financials or generate 11.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hamilton Canadian Bank vs. Hamilton MidSmall Cap Financia
Performance |
| Timeline |
| Hamilton Canadian Bank |
| Hamilton MidSmall Cap |
Hamilton Canadian and Hamilton MidSmall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hamilton Canadian and Hamilton MidSmall
The main advantage of trading using opposite Hamilton Canadian and Hamilton MidSmall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton Canadian 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 Canadian vs. Hamilton Enhanced Canadian | Hamilton Canadian vs. Hamilton Enhanced Canadian | Hamilton Canadian vs. Hamilton Australian Bank | Hamilton Canadian vs. Hamilton Global Financials |
| Hamilton MidSmall vs. CI Canadian Banks | Hamilton MidSmall vs. Condor Gold Plc | Hamilton MidSmall vs. BMO Mid Term IG | Hamilton MidSmall vs. Celestica |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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