Correlation Between BMO Covered and Hamilton Canadian
Can any of the company-specific risk be diversified away by investing in both BMO Covered and Hamilton Canadian 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 Covered and Hamilton Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Covered Call and Hamilton Canadian Bank, you can compare the effects of market volatilities on BMO Covered and Hamilton Canadian 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 Covered with a short position of Hamilton Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Covered and Hamilton Canadian.
Diversification Opportunities for BMO Covered and Hamilton Canadian
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between BMO and Hamilton is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding BMO Covered Call and Hamilton Canadian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Canadian Bank and BMO Covered 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 Covered Call are associated (or correlated) with Hamilton Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Canadian Bank has no effect on the direction of BMO Covered i.e., BMO Covered and Hamilton Canadian go up and down completely randomly.
Pair Corralation between BMO Covered and Hamilton Canadian
Assuming the 90 days trading horizon BMO Covered is expected to generate 1.29 times less return on investment than Hamilton Canadian. But when comparing it to its historical volatility, BMO Covered Call is 1.2 times less risky than Hamilton Canadian. It trades about 0.19 of its potential returns per unit of risk. Hamilton Canadian Bank is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,454 in Hamilton Canadian Bank on September 2, 2024 and sell it today you would earn a total of 543.00 from holding Hamilton Canadian Bank or generate 37.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMO Covered Call vs. Hamilton Canadian Bank
Performance |
| Timeline |
| BMO Covered Call |
| Hamilton Canadian Bank |
BMO Covered and Hamilton Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMO Covered and Hamilton Canadian
The main advantage of trading using opposite BMO Covered and Hamilton Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Covered position performs unexpectedly, Hamilton Canadian 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 Canadian will offset losses from the drop in Hamilton Canadian's long position.| BMO Covered vs. BMO Canadian Dividend | BMO Covered vs. BMO Covered Call | BMO Covered vs. BMO Canadian High | BMO Covered vs. BMO NASDAQ 100 |
| Hamilton Canadian vs. Hamilton Equity Yield | Hamilton Canadian vs. Hamilton Enhanced Canadian | Hamilton Canadian vs. Hamilton Australian Bank | Hamilton Canadian 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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