Correlation Between BMO Equal and Hamilton Mid
Can any of the company-specific risk be diversified away by investing in both BMO Equal and Hamilton Mid 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 Equal and Hamilton Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Equal Weight and Hamilton Mid Cap Financials, you can compare the effects of market volatilities on BMO Equal and Hamilton Mid 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 Equal with a short position of Hamilton Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Equal and Hamilton Mid.
Diversification Opportunities for BMO Equal and Hamilton Mid
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BMO and Hamilton is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding BMO Equal Weight and Hamilton Mid Cap Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Mid Cap and BMO Equal 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 Equal Weight are associated (or correlated) with Hamilton Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Mid Cap has no effect on the direction of BMO Equal i.e., BMO Equal and Hamilton Mid go up and down completely randomly.
Pair Corralation between BMO Equal and Hamilton Mid
Assuming the 90 days trading horizon BMO Equal is expected to generate 1.69 times less return on investment than Hamilton Mid. But when comparing it to its historical volatility, BMO Equal Weight is 4.33 times less risky than Hamilton Mid. It trades about 0.14 of its potential returns per unit of risk. Hamilton Mid Cap Financials is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,613 in Hamilton Mid Cap Financials on November 4, 2024 and sell it today you would earn a total of 1,146 from holding Hamilton Mid Cap Financials or generate 43.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Equal Weight vs. Hamilton Mid Cap Financials
Performance |
| Timeline |
| BMO Equal Weight |
| Hamilton Mid Cap |
BMO Equal and Hamilton Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Equal and Hamilton Mid
The main advantage of trading using opposite BMO Equal and Hamilton Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Equal position performs unexpectedly, Hamilton Mid 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 Mid will offset losses from the drop in Hamilton Mid's long position.| BMO Equal vs. BMO Short Term Bond | BMO Equal vs. BMO Canadian Bank | BMO Equal vs. BMO Aggregate Bond | BMO Equal vs. BMO Balanced ETF |
| Hamilton Mid vs. CI Canadian Banks | Hamilton Mid vs. BMO Mid Term IG | Hamilton Mid vs. Celestica | Hamilton Mid vs. Descartes Systems Group |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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