Correlation Between Hamilton Canadian and Evolve Canadian

Can any of the company-specific risk be diversified away by investing in both Hamilton Canadian 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 Canadian 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 Canadian Financials and Evolve Canadian Banks, you can compare the effects of market volatilities on Hamilton Canadian 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 Canadian with a short position of Evolve Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Canadian and Evolve Canadian.

Diversification Opportunities for Hamilton Canadian and Evolve Canadian

0.99

Correlation Coefficient

Hamilton Canadian  Evolve Canadian

No risk reduction

The 3 months correlation between Hamilton and Evolve is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Canadian Financials 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 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 Financials 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 Canadian i.e., Hamilton Canadian and Evolve Canadian go up and down completely randomly.

Pair Corralation between Hamilton Canadian and Evolve Canadian

Assuming the 90 days trading horizon Hamilton Canadian is expected to generate 1.34 times less return on investment than Evolve Canadian. But when comparing it to its historical volatility, Hamilton Canadian Financials is 1.28 times less risky than Evolve Canadian. It trades about 0.3 of its potential returns per unit of risk. Evolve Canadian Banks is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  744.00  in Evolve Canadian Banks on September 13, 2024 and sell it today you would earn a total of  82.00  from holding Evolve Canadian Banks or generate 11.02% return on investment over 90 days.

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

Hamilton Canadian Financials  vs.  Evolve Canadian Banks

Hamilton Canadian

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Canadian Financials are ranked lower than 23 (%) 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 January 2025.

Evolve Canadian Banks

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Canadian Banks are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Evolve Canadian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hamilton Canadian and Evolve Canadian

The main advantage of trading using opposite Hamilton Canadian and Evolve Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton Canadian 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 Canadian Financials 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.