Correlation Between Hamilton Enhanced and Hamilton Global

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

By analyzing existing cross correlation between Hamilton Enhanced Canadian and Hamilton Global Financials, you can compare the effects of market volatilities on Hamilton Enhanced and Hamilton Global 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 Hamilton Enhanced with a short position of Hamilton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Enhanced and Hamilton Global.

Diversification Opportunities for Hamilton Enhanced and Hamilton Global

0.97

Correlation Coefficient

Hamilton Enhanced  Hamilton Global

Almost no diversification

The 3 months correlation between Hamilton and Hamilton is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Enhanced Canadian and Hamilton Global Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Global Fina and Hamilton Enhanced 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 Hamilton Enhanced Canadian are associated (or correlated) with Hamilton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Global Fina has no effect on the direction of Hamilton Enhanced i.e., Hamilton Enhanced and Hamilton Global go up and down completely randomly.

Pair Corralation between Hamilton Enhanced and Hamilton Global

Assuming the 90 days trading horizon Hamilton Enhanced Canadian is expected to generate 0.75 times more return on investment than Hamilton Global. However, Hamilton Enhanced Canadian is 1.33 times less risky than Hamilton Global. It trades about 0.41 of its potential returns per unit of risk. Hamilton Global Financials is currently generating about 0.18 per unit of risk. If you would invest  2,466  in Hamilton Enhanced Canadian on September 12, 2024 and sell it today you would earn a total of  104.00  from holding Hamilton Enhanced Canadian or generate 4.22% return on investment over 90 days.

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

Hamilton Enhanced Canadian  vs.  Hamilton Global Financials

Hamilton Enhanced

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Enhanced Canadian are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Hamilton Enhanced may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hamilton Global Fina

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Global Financials are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Hamilton Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hamilton Enhanced and Hamilton Global

The main advantage of trading using opposite Hamilton Enhanced and Hamilton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton Enhanced position performs unexpectedly, Hamilton Global 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 Global will offset losses from the drop in Hamilton Global's long position.

The idea behind Hamilton Enhanced Canadian and Hamilton Global 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.