Correlation Between Hamilton Enhanced and Hamilton Equity

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

Diversification Opportunities for Hamilton Enhanced and Hamilton Equity

0.93

Correlation Coefficient

Hamilton Enhanced  Hamilton Equity

Almost no diversification

The 3 months correlation between Hamilton and Hamilton is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Enhanced Canadian and Hamilton Equity YIELD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Equity 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 Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Equity YIELD has no effect on the direction of Hamilton Enhanced i.e., Hamilton Enhanced and Hamilton Equity go up and down completely randomly.

Pair Corralation between Hamilton Enhanced and Hamilton Equity

Assuming the 90 days trading horizon Hamilton Enhanced Canadian is expected to generate 0.93 times more return on investment than Hamilton Equity. However, Hamilton Enhanced Canadian is 1.08 times less risky than Hamilton Equity. It trades about 0.18 of its potential returns per unit of risk. Hamilton Equity YIELD is currently generating about 0.15 per unit of risk. If you would invest  1,971  in Hamilton Enhanced Canadian on October 12, 2024 and sell it today you would earn a total of  539.00  from holding Hamilton Enhanced Canadian or generate 27.35% return on investment over 90 days.

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

Hamilton Enhanced Canadian  vs.  Hamilton Equity YIELD

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.

Hamilton Equity YIELD

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Equity YIELD are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Hamilton Equity may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hamilton Enhanced and Hamilton Equity

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

The idea behind Hamilton Enhanced Canadian and Hamilton Equity 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.