Correlation Between Hamilton Enhanced and Evolve Canadian

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

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

Diversification Opportunities for Hamilton Enhanced and Evolve Canadian

0.46

Correlation Coefficient

Hamilton Enhanced  Evolve Canadian

Very weak diversification

The 3 months correlation between Hamilton and Evolve is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Enhanced Multi Sector and Evolve Canadian Banks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Canadian Banks 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 Multi Sector are associated (or correlated) with Evolve Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Canadian Banks has no effect on the direction of Hamilton Enhanced i.e., Hamilton Enhanced and Evolve Canadian go up and down completely randomly.

Pair Corralation between Hamilton Enhanced and Evolve Canadian

Assuming the 90 days trading horizon Hamilton Enhanced Multi Sector is expected to under-perform the Evolve Canadian. In addition to that, Hamilton Enhanced is 1.11 times more volatile than Evolve Canadian Banks. It trades about -0.06 of its total potential returns per unit of risk. Evolve Canadian Banks is currently generating about -0.01 per unit of volatility. If you would invest  796.00  in Evolve Canadian Banks on December 4, 2024 and sell it today you would lose (4.00) from holding Evolve Canadian Banks or give up 0.5% of portfolio value over 90 days.

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

Hamilton Enhanced Multi Sector  vs.  Evolve Canadian Banks

Hamilton Enhanced Multi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hamilton Enhanced Multi Sector has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Evolve Canadian Banks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evolve Canadian Banks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Evolve Canadian is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hamilton Enhanced and Evolve Canadian

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

The idea behind Hamilton Enhanced Multi Sector and Evolve Canadian Banks 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.