Correlation Between Hamilton MidSmall and Hamilton Equity

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

Diversification Opportunities for Hamilton MidSmall and Hamilton Equity

0.7

Correlation Coefficient

Hamilton MidSmall  Hamilton Equity

Poor diversification

The 3 months correlation between Hamilton and Hamilton is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton MidSmall Cap Financia 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 MidSmall 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 MidSmall Cap Financials 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 MidSmall i.e., Hamilton MidSmall and Hamilton Equity go up and down completely randomly.

Pair Corralation between Hamilton MidSmall and Hamilton Equity

Assuming the 90 days trading horizon Hamilton MidSmall is expected to generate 2.98 times less return on investment than Hamilton Equity. In addition to that, Hamilton MidSmall is 1.86 times more volatile than Hamilton Equity YIELD. It trades about 0.02 of its total potential returns per unit of risk. Hamilton Equity YIELD is currently generating about 0.13 per unit of volatility. If you would invest  1,906  in Hamilton Equity YIELD on October 12, 2024 and sell it today you would earn a total of  121.00  from holding Hamilton Equity YIELD or generate 6.35% return on investment over 90 days.

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

Hamilton MidSmall Cap Financia  vs.  Hamilton Equity YIELD

Hamilton MidSmall Cap

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton MidSmall Cap Financials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hamilton MidSmall is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private 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 MidSmall and Hamilton Equity

The main advantage of trading using opposite Hamilton MidSmall and Hamilton Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton MidSmall 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 MidSmall Cap Financials 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.

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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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .