Correlation Between CI Gold and Hamilton Canadian

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

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

Diversification Opportunities for CI Gold and Hamilton Canadian

-0.5

Correlation Coefficient

CI Gold  Hamilton Canadian

Very good diversification

The 3 months correlation between CGXF and Hamilton is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding CI Gold Giants and Hamilton Canadian Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Canadian and CI Gold 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 CI Gold Giants are associated (or correlated) with Hamilton Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Canadian has no effect on the direction of CI Gold i.e., CI Gold and Hamilton Canadian go up and down completely randomly.

Pair Corralation between CI Gold and Hamilton Canadian

Assuming the 90 days trading horizon CI Gold Giants is expected to generate 1.67 times more return on investment than Hamilton Canadian. However, CI Gold is 1.67 times more volatile than Hamilton Canadian Financials. It trades about 0.34 of its potential returns per unit of risk. Hamilton Canadian Financials is currently generating about -0.05 per unit of risk. If you would invest  990.00  in CI Gold Giants on December 30, 2024 and sell it today you would earn a total of  337.00  from holding CI Gold Giants or generate 34.04% return on investment over 90 days.

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

CI Gold Giants  vs.  Hamilton Canadian Financials

CI Gold Giants

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CI Gold Giants are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CI Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Hamilton Canadian

Risk-Adjusted Performance

Very Weak

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

Pair Trading with CI Gold and Hamilton Canadian

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

The idea behind CI Gold Giants and Hamilton Canadian 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.