Correlation Between IShares SPTSX and Hamilton MidSmall
Can any of the company-specific risk be diversified away by investing in both IShares SPTSX 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 IShares SPTSX and Hamilton MidSmall 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 MidSmall Cap Financials, you can compare the effects of market volatilities on IShares SPTSX 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 IShares SPTSX with a short position of Hamilton MidSmall. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and Hamilton MidSmall.
Diversification Opportunities for IShares SPTSX and Hamilton MidSmall
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and Hamilton is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped 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 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 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 IShares SPTSX i.e., IShares SPTSX and Hamilton MidSmall go up and down completely randomly.
Pair Corralation between IShares SPTSX and Hamilton MidSmall
Assuming the 90 days trading horizon iShares SPTSX Capped is expected to under-perform the Hamilton MidSmall. But the etf apears to be less risky and, when comparing its historical volatility, iShares SPTSX Capped is 1.08 times less risky than Hamilton MidSmall. The etf trades about -0.12 of its potential returns per unit of risk. The Hamilton MidSmall Cap Financials is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,780 in Hamilton MidSmall Cap Financials on September 13, 2024 and sell it today you would lose (19.00) from holding Hamilton MidSmall Cap Financials or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares SPTSX Capped vs. Hamilton MidSmall Cap Financia
Performance |
| Timeline |
| iShares SPTSX Capped |
| Hamilton MidSmall Cap |
IShares SPTSX and Hamilton MidSmall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SPTSX and Hamilton MidSmall
The main advantage of trading using opposite IShares SPTSX and Hamilton MidSmall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SPTSX 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.| IShares SPTSX vs. iShares SPTSX Capped | IShares SPTSX vs. iShares Canadian Select | IShares SPTSX vs. iShares SPTSX Capped | IShares SPTSX vs. BMO Equal Weight |
| Hamilton MidSmall vs. iShares SPTSX Capped | Hamilton MidSmall vs. iShares SPTSX Capped | Hamilton MidSmall vs. iShares SPTSX Global | Hamilton MidSmall vs. iShares SPTSX Capped |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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