Correlation Between Hamilton Canadian and Harvest Diversified
Can any of the company-specific risk be diversified away by investing in both Hamilton Canadian and Harvest Diversified 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 Harvest Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hamilton Canadian Financials and Harvest Diversified Monthly, you can compare the effects of market volatilities on Hamilton Canadian and Harvest Diversified 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 Harvest Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Canadian and Harvest Diversified.
Diversification Opportunities for Hamilton Canadian and Harvest Diversified
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hamilton and Harvest is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Canadian Financials and Harvest Diversified Monthly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Diversified 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 Financials are associated (or correlated) with Harvest Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Diversified has no effect on the direction of Hamilton Canadian i.e., Hamilton Canadian and Harvest Diversified go up and down completely randomly.
Pair Corralation between Hamilton Canadian and Harvest Diversified
Assuming the 90 days trading horizon Hamilton Canadian Financials is expected to generate 0.67 times more return on investment than Harvest Diversified. However, Hamilton Canadian Financials is 1.49 times less risky than Harvest Diversified. It trades about 0.28 of its potential returns per unit of risk. Harvest Diversified Monthly is currently generating about 0.15 per unit of risk. If you would invest 1,238 in Hamilton Canadian Financials on November 3, 2024 and sell it today you would earn a total of 235.00 from holding Hamilton Canadian Financials or generate 18.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hamilton Canadian Financials vs. Harvest Diversified Monthly
Performance |
| Timeline |
| Hamilton Canadian |
| Harvest Diversified |
Hamilton Canadian and Harvest Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hamilton Canadian and Harvest Diversified
The main advantage of trading using opposite Hamilton Canadian and Harvest Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton Canadian position performs unexpectedly, Harvest Diversified 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 Harvest Diversified will offset losses from the drop in Harvest Diversified's long position.| Hamilton Canadian vs. Hamilton Enhanced Covered | Hamilton Canadian vs. Hamilton Enhanced Multi Sector | Hamilton Canadian vs. Harvest Diversified Monthly | Hamilton Canadian vs. Brompton Enhanced Multi Asset |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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