Correlation Between Hamilton Canadian and IShares Core

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Can any of the company-specific risk be diversified away by investing in both Hamilton Canadian and IShares Core 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 IShares Core 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 iShares Core Growth, you can compare the effects of market volatilities on Hamilton Canadian and IShares Core 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 IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Canadian and IShares Core.

Diversification Opportunities for Hamilton Canadian and IShares Core

0.97
  Correlation Coefficient

Almost no diversification

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

Pair Corralation between Hamilton Canadian and IShares Core

Assuming the 90 days trading horizon Hamilton Canadian Financials is expected to generate 0.98 times more return on investment than IShares Core. However, Hamilton Canadian Financials is 1.02 times less risky than IShares Core. It trades about 0.26 of its potential returns per unit of risk. iShares Core Growth is currently generating about 0.25 per unit of risk. If you would invest  1,386  in Hamilton Canadian Financials on September 18, 2024 and sell it today you would earn a total of  99.00  from holding Hamilton Canadian Financials or generate 7.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Hamilton Canadian Financials  vs.  iShares Core Growth

 Performance 
       Timeline  
Hamilton Canadian 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Canadian Financials are ranked lower than 20 (%) 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.
iShares Core Growth 

Risk-Adjusted Performance

20 of 100

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

Hamilton Canadian and IShares Core Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hamilton Canadian and IShares Core

The main advantage of trading using opposite Hamilton Canadian and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton Canadian position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.
The idea behind Hamilton Canadian Financials and iShares Core Growth 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 Stocks Directory module to find actively traded stocks across global markets.

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