Correlation Between CI Canada and Hamilton Canadian

Can any of the company-specific risk be diversified away by investing in both CI Canada 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 Canada 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 Canada Lifeco and Hamilton Canadian Bank, you can compare the effects of market volatilities on CI Canada 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 Canada with a short position of Hamilton Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Canada and Hamilton Canadian.

Diversification Opportunities for CI Canada and Hamilton Canadian

0.28

Correlation Coefficient

CI Canada  Hamilton Canadian

Modest diversification

The 3 months correlation between FLI and Hamilton is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding CI Canada Lifeco and Hamilton Canadian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Canadian Bank and CI Canada 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 Canada Lifeco 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 Bank has no effect on the direction of CI Canada i.e., CI Canada and Hamilton Canadian go up and down completely randomly.

Pair Corralation between CI Canada and Hamilton Canadian

Assuming the 90 days trading horizon CI Canada Lifeco is expected to generate 1.44 times more return on investment than Hamilton Canadian. However, CI Canada is 1.44 times more volatile than Hamilton Canadian Bank. It trades about 0.08 of its potential returns per unit of risk. Hamilton Canadian Bank is currently generating about 0.04 per unit of risk. If you would invest  1,084  in CI Canada Lifeco on December 30, 2024 and sell it today you would earn a total of  61.00  from holding CI Canada Lifeco or generate 5.63% return on investment over 90 days.

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

CI Canada Lifeco  vs.  Hamilton Canadian Bank

CI Canada Lifeco

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CI Canada Lifeco are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, CI Canada is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Hamilton Canadian Bank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Canadian Bank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 Canada and Hamilton Canadian

The main advantage of trading using opposite CI Canada and Hamilton Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Canada 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 Canada Lifeco and Hamilton Canadian Bank 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.