Correlation Between BMO NASDAQ and Hamilton Australian
Can any of the company-specific risk be diversified away by investing in both BMO NASDAQ and Hamilton Australian 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 NASDAQ and Hamilton Australian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO NASDAQ 100 and Hamilton Australian Bank, you can compare the effects of market volatilities on BMO NASDAQ and Hamilton Australian 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 NASDAQ with a short position of Hamilton Australian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO NASDAQ and Hamilton Australian.
Diversification Opportunities for BMO NASDAQ and Hamilton Australian
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 NASDAQ 100 and Hamilton Australian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Australian Bank and BMO NASDAQ 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 NASDAQ 100 are associated (or correlated) with Hamilton Australian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Australian Bank has no effect on the direction of BMO NASDAQ i.e., BMO NASDAQ and Hamilton Australian go up and down completely randomly.
Pair Corralation between BMO NASDAQ and Hamilton Australian
Assuming the 90 days trading horizon BMO NASDAQ is expected to generate 1.44 times less return on investment than Hamilton Australian. In addition to that, BMO NASDAQ is 1.14 times more volatile than Hamilton Australian Bank. It trades about 0.1 of its total potential returns per unit of risk. Hamilton Australian Bank is currently generating about 0.17 per unit of volatility. If you would invest 2,030 in Hamilton Australian Bank on September 2, 2024 and sell it today you would earn a total of 951.00 from holding Hamilton Australian Bank or generate 46.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO NASDAQ 100 vs. Hamilton Australian Bank
Performance |
| Timeline |
| BMO NASDAQ 100 |
| Hamilton Australian Bank |
BMO NASDAQ and Hamilton Australian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO NASDAQ and Hamilton Australian
The main advantage of trading using opposite BMO NASDAQ and Hamilton Australian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO NASDAQ position performs unexpectedly, Hamilton Australian 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 Australian will offset losses from the drop in Hamilton Australian's long position.| BMO NASDAQ vs. BMO SP 500 | BMO NASDAQ vs. iShares NASDAQ 100 | BMO NASDAQ vs. BMO SPTSX Equal | BMO NASDAQ vs. iShares SPTSX Capped |
| Hamilton Australian vs. BMO Canadian Dividend | Hamilton Australian vs. BMO Covered Call | Hamilton Australian vs. BMO Canadian High | Hamilton Australian vs. BMO NASDAQ 100 |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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