Correlation Between Hamilton Canadian and BMO Global
Can any of the company-specific risk be diversified away by investing in both Hamilton Canadian and BMO Global 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 BMO Global 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 BMO Global High, you can compare the effects of market volatilities on Hamilton Canadian and BMO Global 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 BMO Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Canadian and BMO Global.
Diversification Opportunities for Hamilton Canadian and BMO Global
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hamilton and BMO is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Canadian Bank and BMO Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Global High 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 BMO Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Global High has no effect on the direction of Hamilton Canadian i.e., Hamilton Canadian and BMO Global go up and down completely randomly.
Pair Corralation between Hamilton Canadian and BMO Global
Assuming the 90 days trading horizon Hamilton Canadian Bank is expected to generate 1.77 times more return on investment than BMO Global. However, Hamilton Canadian is 1.77 times more volatile than BMO Global High. It trades about 0.11 of its potential returns per unit of risk. BMO Global High is currently generating about 0.12 per unit of risk. If you would invest 1,508 in Hamilton Canadian Bank on November 27, 2024 and sell it today you would earn a total of 896.00 from holding Hamilton Canadian Bank or generate 59.42% 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. BMO Global High
Performance |
| Timeline |
| Hamilton Canadian Bank |
| BMO Global High |
Hamilton Canadian and BMO Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hamilton Canadian and BMO Global
The main advantage of trading using opposite Hamilton Canadian and BMO Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton Canadian position performs unexpectedly, BMO Global 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 Global will offset losses from the drop in BMO Global'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 |
| BMO Global vs. BMO Short Term Bond | BMO Global vs. BMO Canadian Bank | BMO Global vs. BMO Aggregate Bond | BMO Global 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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