Correlation Between IShares SPTSX and Hamilton Australian
Can any of the company-specific risk be diversified away by investing in both IShares SPTSX and Hamilton Australian 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 IShares SPTSX and Hamilton Australian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SPTSX Capped and Hamilton Australian Bank, you can compare the effects of market volatilities on IShares SPTSX and Hamilton Australian 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 IShares SPTSX with a short position of Hamilton Australian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and Hamilton Australian.
Diversification Opportunities for IShares SPTSX and Hamilton Australian
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Hamilton is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped and Hamilton Australian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Australian Bank and IShares SPTSX 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 iShares SPTSX Capped are associated (or correlated) with Hamilton Australian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Australian Bank has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and Hamilton Australian go up and down completely randomly.
Pair Corralation between IShares SPTSX and Hamilton Australian
Assuming the 90 days trading horizon IShares SPTSX is expected to generate 1.15 times less return on investment than Hamilton Australian. But when comparing it to its historical volatility, iShares SPTSX Capped is 1.44 times less risky than Hamilton Australian. It trades about 0.21 of its potential returns per unit of risk. Hamilton Australian Bank is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,030 in Hamilton Australian Bank on September 2, 2024 and sell it today you would earn a total of 951.00 from holding Hamilton Australian Bank or generate 46.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SPTSX Capped vs. Hamilton Australian Bank
Performance |
| Timeline |
| iShares SPTSX Capped |
| Hamilton Australian Bank |
IShares SPTSX and Hamilton Australian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SPTSX and Hamilton Australian
The main advantage of trading using opposite IShares SPTSX and Hamilton Australian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SPTSX position performs unexpectedly, Hamilton Australian 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 Australian will offset losses from the drop in Hamilton Australian's long position.| IShares SPTSX vs. iShares SPTSX Capped | IShares SPTSX vs. iShares SPTSX Capped | IShares SPTSX vs. iShares SPTSX Global | IShares SPTSX vs. iShares SPTSX Capped |
| Hamilton Australian vs. BMO Canadian Dividend | Hamilton Australian vs. BMO Covered Call | Hamilton Australian vs. BMO Canadian High | Hamilton Australian vs. BMO NASDAQ 100 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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