Correlation Between Hamilton Enhanced and Desjardins Alt

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

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

Diversification Opportunities for Hamilton Enhanced and Desjardins Alt

0.95

Correlation Coefficient

Hamilton Enhanced  Desjardins Alt

Almost no diversification

The 3 months correlation between Hamilton and Desjardins is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Enhanced Canadian and Desjardins Alt LongShort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins Alt LongShort and Hamilton Enhanced 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 Enhanced Canadian are associated (or correlated) with Desjardins Alt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins Alt LongShort has no effect on the direction of Hamilton Enhanced i.e., Hamilton Enhanced and Desjardins Alt go up and down completely randomly.

Pair Corralation between Hamilton Enhanced and Desjardins Alt

Assuming the 90 days trading horizon Hamilton Enhanced Canadian is expected to under-perform the Desjardins Alt. In addition to that, Hamilton Enhanced is 4.96 times more volatile than Desjardins Alt LongShort. It trades about -0.25 of its total potential returns per unit of risk. Desjardins Alt LongShort is currently generating about -0.08 per unit of volatility. If you would invest  2,271  in Desjardins Alt LongShort on October 9, 2024 and sell it today you would lose (3.00) from holding Desjardins Alt LongShort or give up 0.13% of portfolio value over 90 days.

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

Hamilton Enhanced Canadian  vs.  Desjardins Alt LongShort

Hamilton Enhanced

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Enhanced Canadian are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Hamilton Enhanced is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Desjardins Alt LongShort

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Desjardins Alt LongShort are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Desjardins Alt 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 Enhanced and Desjardins Alt

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

The idea behind Hamilton Enhanced Canadian and Desjardins Alt LongShort 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.