Correlation Between Picton Mahoney and Hamilton Enhanced

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

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

Diversification Opportunities for Picton Mahoney and Hamilton Enhanced

0.93

Correlation Coefficient

Picton Mahoney  Hamilton Enhanced

Almost no diversification

The 3 months correlation between Picton and Hamilton is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Picton Mahoney Fortified and Hamilton Enhanced Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Enhanced and Picton Mahoney 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 Picton Mahoney Fortified are associated (or correlated) with Hamilton Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Enhanced has no effect on the direction of Picton Mahoney i.e., Picton Mahoney and Hamilton Enhanced go up and down completely randomly.

Pair Corralation between Picton Mahoney and Hamilton Enhanced

Assuming the 90 days trading horizon Picton Mahoney is expected to generate 1.82 times less return on investment than Hamilton Enhanced. In addition to that, Picton Mahoney is 1.28 times more volatile than Hamilton Enhanced Canadian. It trades about 0.16 of its total potential returns per unit of risk. Hamilton Enhanced Canadian is currently generating about 0.38 per unit of volatility. If you would invest  2,216  in Hamilton Enhanced Canadian on September 4, 2024 and sell it today you would earn a total of  324.00  from holding Hamilton Enhanced Canadian or generate 14.62% return on investment over 90 days.

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

Picton Mahoney Fortified  vs.  Hamilton Enhanced Canadian

Picton Mahoney Fortified

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Picton Mahoney Fortified are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Picton Mahoney may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hamilton Enhanced

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Enhanced Canadian are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Hamilton Enhanced displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Picton Mahoney and Hamilton Enhanced

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

The idea behind Picton Mahoney Fortified and Hamilton Enhanced Canadian 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 Transaction History module to view history of all your transactions and understand their impact on performance.