Correlation Between Hamilton Enhanced and Hamilton Energy

Can any of the company-specific risk be diversified away by investing in both Hamilton Enhanced and Hamilton Energy 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 Hamilton Energy 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 Hamilton Energy YIELD, you can compare the effects of market volatilities on Hamilton Enhanced and Hamilton Energy 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 Hamilton Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Enhanced and Hamilton Energy.

Diversification Opportunities for Hamilton Enhanced and Hamilton Energy

0.24

Correlation Coefficient

Hamilton Enhanced  Hamilton Energy

Modest diversification

The 3 months correlation between Hamilton and Hamilton is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Enhanced Canadian and Hamilton Energy YIELD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Energy YIELD 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 Hamilton Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Energy YIELD has no effect on the direction of Hamilton Enhanced i.e., Hamilton Enhanced and Hamilton Energy go up and down completely randomly.

Pair Corralation between Hamilton Enhanced and Hamilton Energy

Assuming the 90 days trading horizon Hamilton Enhanced Canadian is expected to generate 0.9 times more return on investment than Hamilton Energy. However, Hamilton Enhanced Canadian is 1.11 times less risky than Hamilton Energy. It trades about 0.06 of its potential returns per unit of risk. Hamilton Energy YIELD is currently generating about 0.04 per unit of risk. If you would invest  1,956  in Hamilton Enhanced Canadian on October 27, 2024 and sell it today you would earn a total of  588.00  from holding Hamilton Enhanced Canadian or generate 30.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	49.29%
Values	Daily Returns

Hamilton Enhanced Canadian  vs.  Hamilton Energy YIELD

Hamilton Enhanced

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Enhanced Canadian are ranked lower than 13 (%) 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.

Hamilton Energy YIELD

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Energy YIELD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Hamilton Energy 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 Hamilton Energy

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

The idea behind Hamilton Enhanced Canadian and Hamilton Energy YIELD 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.