Correlation Between Hamilton Canadian and Global X

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

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

Diversification Opportunities for Hamilton Canadian and Global X

0.62

Correlation Coefficient

Hamilton Canadian  Global X

Poor diversification

The 3 months correlation between Hamilton and Global is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Canadian Financials and Global X Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Uranium and Hamilton Canadian 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 Canadian Financials are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Uranium has no effect on the direction of Hamilton Canadian i.e., Hamilton Canadian and Global X go up and down completely randomly.

Pair Corralation between Hamilton Canadian and Global X

Assuming the 90 days trading horizon Hamilton Canadian is expected to generate 3.01 times less return on investment than Global X. But when comparing it to its historical volatility, Hamilton Canadian Financials is 4.55 times less risky than Global X. It trades about 0.25 of its potential returns per unit of risk. Global X Uranium is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,156  in Global X Uranium on September 15, 2024 and sell it today you would earn a total of  647.00  from holding Global X Uranium or generate 20.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Hamilton Canadian Financials  vs.  Global X Uranium

Hamilton Canadian

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Canadian Financials are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Hamilton Canadian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global X Uranium

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Global X Uranium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Global X displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hamilton Canadian and Global X

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

The idea behind Hamilton Canadian Financials and Global X Uranium 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.