Correlation Between IShares Equal and Hamilton Global

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

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

Diversification Opportunities for IShares Equal and Hamilton Global

0.24

Correlation Coefficient

IShares Equal  Hamilton Global

Modest diversification

The 3 months correlation between IShares and Hamilton is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding iShares Equal Weight 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 IShares Equal 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 iShares Equal Weight 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 IShares Equal i.e., IShares Equal and Hamilton Global go up and down completely randomly.

Pair Corralation between IShares Equal and Hamilton Global

Assuming the 90 days trading horizon iShares Equal Weight is expected to under-perform the Hamilton Global. But the etf apears to be less risky and, when comparing its historical volatility, iShares Equal Weight is 1.04 times less risky than Hamilton Global. The etf trades about -0.02 of its potential returns per unit of risk. The Hamilton Global Financials is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,738  in Hamilton Global Financials on December 31, 2024 and sell it today you would earn a total of  165.00  from holding Hamilton Global Financials or generate 6.03% return on investment over 90 days.

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

iShares Equal Weight  vs.  Hamilton Global Financials

iShares Equal Weight

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Equal Weight has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares Equal is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Hamilton Global Fina

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Global Financials are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Hamilton Global is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Equal and Hamilton Global

The main advantage of trading using opposite IShares Equal and Hamilton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Equal 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 iShares Equal Weight 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..