Correlation Between Tech Leaders and Hamilton MidSmall
Can any of the company-specific risk be diversified away by investing in both Tech Leaders 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 Tech Leaders and Hamilton MidSmall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tech Leaders Income and Hamilton MidSmall Cap Financials, you can compare the effects of market volatilities on Tech Leaders 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 Tech Leaders with a short position of Hamilton MidSmall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tech Leaders and Hamilton MidSmall.
Diversification Opportunities for Tech Leaders and Hamilton MidSmall
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tech and Hamilton is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tech Leaders Income 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 Tech Leaders 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 Tech Leaders Income 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 Tech Leaders i.e., Tech Leaders and Hamilton MidSmall go up and down completely randomly.
Pair Corralation between Tech Leaders and Hamilton MidSmall
Assuming the 90 days trading horizon Tech Leaders is expected to generate 3.31 times less return on investment than Hamilton MidSmall. But when comparing it to its historical volatility, Tech Leaders Income is 1.94 times less risky than Hamilton MidSmall. It trades about 0.18 of its potential returns per unit of risk. Hamilton MidSmall Cap Financials is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 3,411 in Hamilton MidSmall Cap Financials on September 2, 2024 and sell it today you would earn a total of 474.00 from holding Hamilton MidSmall Cap Financials or generate 13.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tech Leaders Income vs. Hamilton MidSmall Cap Financia
Performance |
| Timeline |
| Tech Leaders Income |
| Hamilton MidSmall Cap |
Tech Leaders and Hamilton MidSmall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tech Leaders and Hamilton MidSmall
The main advantage of trading using opposite Tech Leaders and Hamilton MidSmall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tech Leaders 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.| Tech Leaders vs. iShares Canadian HYBrid | Tech Leaders vs. Brompton European Dividend | Tech Leaders vs. Solar Alliance Energy | Tech Leaders vs. PHN Multi Style All Cap |
| Hamilton MidSmall vs. Brompton Global Dividend | Hamilton MidSmall vs. Global Healthcare Income | Hamilton MidSmall vs. Tech Leaders Income | Hamilton MidSmall vs. Brompton North American |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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