Correlation Between Hamilton Canadian and Global X

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

Diversification Opportunities for Hamilton Canadian and Global X

0.94

Correlation Coefficient

Hamilton Canadian  Global X

Almost no diversification

The 3 months correlation between Hamilton and Global is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Canadian Financials and Global X Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Balanced 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Balanced has no effect on the direction of Hamilton Canadian i.e., Hamilton Canadian and Global X go up and down completely randomly.

Pair Corralation between Hamilton Canadian and Global X

Assuming the 90 days trading horizon Hamilton Canadian Financials is expected to generate 1.11 times more return on investment than Global X. However, Hamilton Canadian is 1.11 times more volatile than Global X Balanced. It trades about 0.25 of its potential returns per unit of risk. Global X Balanced is currently generating about 0.2 per unit of risk. If you would invest  1,390  in Hamilton Canadian Financials on September 15, 2024 and sell it today you would earn a total of  95.00  from holding Hamilton Canadian Financials or generate 6.83% 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.  Global X Balanced

Hamilton Canadian

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Canadian Financials are ranked lower than 19 (%) 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.

Global X Balanced

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Balanced are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Global X 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 Canadian and Global X

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

The idea behind Hamilton Canadian Financials and Global X Balanced 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.