Correlation Between Hamilton Canadian and Harvest Brand

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

By analyzing existing cross correlation between Hamilton Canadian Bank and Harvest Brand Leaders, you can compare the effects of market volatilities on Hamilton Canadian and Harvest Brand 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 Harvest Brand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Canadian and Harvest Brand.

Diversification Opportunities for Hamilton Canadian and Harvest Brand

0.32

Correlation Coefficient

Hamilton Canadian  Harvest Brand

Weak diversification

The 3 months correlation between Hamilton and Harvest is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Canadian Bank and Harvest Brand Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Brand Leaders 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 Bank are associated (or correlated) with Harvest Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Brand Leaders has no effect on the direction of Hamilton Canadian i.e., Hamilton Canadian and Harvest Brand go up and down completely randomly.

Pair Corralation between Hamilton Canadian and Harvest Brand

Assuming the 90 days trading horizon Hamilton Canadian Bank is expected to generate 0.62 times more return on investment than Harvest Brand. However, Hamilton Canadian Bank is 1.62 times less risky than Harvest Brand. It trades about 0.31 of its potential returns per unit of risk. Harvest Brand Leaders is currently generating about 0.09 per unit of risk. If you would invest  2,377  in Hamilton Canadian Bank on October 24, 2024 and sell it today you would earn a total of  63.00  from holding Hamilton Canadian Bank or generate 2.65% return on investment over 90 days.

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

Hamilton Canadian Bank  vs.  Harvest Brand Leaders

Hamilton Canadian Bank

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Canadian Bank are ranked lower than 16 (%) 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 February 2025.

Harvest Brand Leaders

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Brand Leaders are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Harvest Brand is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hamilton Canadian and Harvest Brand

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

The idea behind Hamilton Canadian Bank and Harvest Brand Leaders 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.