Correlation Between Hamilton Canadian and IA Clarington

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

Diversification Opportunities for Hamilton Canadian and IA Clarington

0.94

Correlation Coefficient

Hamilton Canadian  IA Clarington

Almost no diversification

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

Pair Corralation between Hamilton Canadian and IA Clarington

Assuming the 90 days trading horizon Hamilton Canadian Financials is expected to generate 0.54 times more return on investment than IA Clarington. However, Hamilton Canadian Financials is 1.86 times less risky than IA Clarington. It trades about 0.25 of its potential returns per unit of risk. IA Clarington Loomis is currently generating about 0.13 per unit of risk. If you would invest  1,390  in Hamilton Canadian Financials on September 16, 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.  IA Clarington Loomis

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.

IA Clarington Loomis

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IA Clarington Loomis are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IA Clarington may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hamilton Canadian and IA Clarington

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

The idea behind Hamilton Canadian Financials and IA Clarington Loomis 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.