Correlation Between BMO Equal and Hamilton Mid

Specify exactly 2 symbols:
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

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between BMO and Hamilton is 0.71. 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 Weight is expected to under-perform the Hamilton Mid. In addition to that, BMO Equal is 1.29 times more volatile than Hamilton Mid Cap Financials. It trades about -0.24 of its total potential returns per unit of risk. Hamilton Mid Cap Financials is currently generating about -0.19 per unit of volatility. If you would invest  3,709  in Hamilton Mid Cap Financials on November 27, 2024 and sell it today you would lose (123.00) from holding Hamilton Mid Cap Financials or give up 3.32% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

BMO Equal Weight  vs.  Hamilton Mid Cap Financials

 Performance 
       Timeline  
BMO Equal Weight 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days BMO Equal Weight has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, BMO Equal is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Hamilton Mid Cap 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Hamilton Mid Cap Financials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

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.
The idea behind BMO Equal Weight and Hamilton Mid Cap Financials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

Other Complementary Tools

Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
CEOs Directory
Screen CEOs from public companies around the world
Fundamental Analysis
View fundamental data based on most recent published financial statements
Transaction History
View history of all your transactions and understand their impact on performance