Correlation Between CI Canada and Hamilton Australian

Can any of the company-specific risk be diversified away by investing in both CI Canada 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 CI Canada and Hamilton Australian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CI Canada Lifeco and Hamilton Australian Bank, you can compare the effects of market volatilities on CI Canada 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 CI Canada with a short position of Hamilton Australian. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Canada and Hamilton Australian.

Diversification Opportunities for CI Canada and Hamilton Australian

0.67

Correlation Coefficient

CI Canada  Hamilton Australian

Poor diversification

The 3 months correlation between FLI and Hamilton is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CI Canada Lifeco 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 CI Canada 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 CI Canada Lifeco 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 CI Canada i.e., CI Canada and Hamilton Australian go up and down completely randomly.

Pair Corralation between CI Canada and Hamilton Australian

Assuming the 90 days trading horizon CI Canada Lifeco is expected to generate 0.98 times more return on investment than Hamilton Australian. However, CI Canada Lifeco is 1.02 times less risky than Hamilton Australian. It trades about 0.14 of its potential returns per unit of risk. Hamilton Australian Bank is currently generating about 0.12 per unit of risk. If you would invest  942.00  in CI Canada Lifeco on September 12, 2024 and sell it today you would earn a total of  190.00  from holding CI Canada Lifeco or generate 20.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CI Canada Lifeco  vs.  Hamilton Australian Bank

CI Canada Lifeco

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Canada Lifeco are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, CI Canada may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hamilton Australian Bank

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Australian Bank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Hamilton Australian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CI Canada and Hamilton Australian

The main advantage of trading using opposite CI Canada and Hamilton Australian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Canada 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.

The idea behind CI Canada Lifeco and Hamilton Australian Bank 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.