Correlation Between IShares Canadian and Hammond Manufacturing
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and Hammond Manufacturing 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 Canadian and Hammond Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Canadian HYBrid and Hammond Manufacturing, you can compare the effects of market volatilities on IShares Canadian and Hammond Manufacturing 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 Canadian with a short position of Hammond Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Hammond Manufacturing.
Diversification Opportunities for IShares Canadian and Hammond Manufacturing
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and Hammond is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Hammond Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammond Manufacturing and IShares 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 iShares Canadian HYBrid are associated (or correlated) with Hammond Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammond Manufacturing has no effect on the direction of IShares Canadian i.e., IShares Canadian and Hammond Manufacturing go up and down completely randomly.
Pair Corralation between IShares Canadian and Hammond Manufacturing
Assuming the 90 days trading horizon IShares Canadian is expected to generate 3.29 times less return on investment than Hammond Manufacturing. But when comparing it to its historical volatility, iShares Canadian HYBrid is 4.79 times less risky than Hammond Manufacturing. It trades about 0.26 of its potential returns per unit of risk. Hammond Manufacturing is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 980.00 in Hammond Manufacturing on September 2, 2024 and sell it today you would earn a total of 65.00 from holding Hammond Manufacturing or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian HYBrid vs. Hammond Manufacturing
Performance |
| Timeline |
| iShares Canadian HYBrid |
| Hammond Manufacturing |
IShares Canadian and Hammond Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Hammond Manufacturing
The main advantage of trading using opposite IShares Canadian and Hammond Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, Hammond Manufacturing 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 Hammond Manufacturing will offset losses from the drop in Hammond Manufacturing's long position.| IShares Canadian vs. iShares IG Corporate | IShares Canadian vs. iShares High Yield | IShares Canadian vs. iShares Floating Rate | IShares Canadian vs. iShares JP Morgan |
| Hammond Manufacturing vs. Aurora Solar Technologies | Hammond Manufacturing vs. PowerBand Solutions | Hammond Manufacturing vs. Thermal Energy International | Hammond Manufacturing vs. iShares Canadian HYBrid |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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