Correlation Between BMO Aggregate and Hamilton Energy
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Hamilton Energy 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 BMO Aggregate and Hamilton Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Aggregate Bond and Hamilton Energy Yield, you can compare the effects of market volatilities on BMO Aggregate and Hamilton Energy 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 BMO Aggregate with a short position of Hamilton Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Hamilton Energy.
Diversification Opportunities for BMO Aggregate and Hamilton Energy
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BMO and Hamilton is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Hamilton Energy Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Energy Yield and BMO Aggregate 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 BMO Aggregate Bond are associated (or correlated) with Hamilton Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Energy Yield has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Hamilton Energy go up and down completely randomly.
Pair Corralation between BMO Aggregate and Hamilton Energy
Assuming the 90 days trading horizon BMO Aggregate is expected to generate 3.26 times less return on investment than Hamilton Energy. But when comparing it to its historical volatility, BMO Aggregate Bond is 2.41 times less risky than Hamilton Energy. It trades about 0.04 of its potential returns per unit of risk. Hamilton Energy Yield is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,465 in Hamilton Energy Yield on August 31, 2024 and sell it today you would earn a total of 182.00 from holding Hamilton Energy Yield or generate 12.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 42.98% |
| Values | Daily Returns |
BMO Aggregate Bond vs. Hamilton Energy Yield
Performance |
| Timeline |
| BMO Aggregate Bond |
| Hamilton Energy Yield |
BMO Aggregate and Hamilton Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Aggregate and Hamilton Energy
The main advantage of trading using opposite BMO Aggregate and Hamilton Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Hamilton Energy 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 Energy will offset losses from the drop in Hamilton Energy's long position.| BMO Aggregate vs. iShares Core MSCI | BMO Aggregate vs. Vanguard FTSE Canada | BMO Aggregate vs. Vanguard Canadian Aggregate | BMO Aggregate vs. iShares Core MSCI |
| Hamilton Energy vs. Hamilton Equity Yield | Hamilton Energy vs. Hamilton Enhanced Canadian | Hamilton Energy vs. Hamilton Australian Bank | Hamilton Energy vs. Hamilton MidSmall Cap Financials |
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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