Correlation Between Hamilton Mid and CI Investment

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

By analyzing existing cross correlation between Hamilton Mid Cap Financials and CI Investment Grade, you can compare the effects of market volatilities on Hamilton Mid and CI Investment 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 Mid with a short position of CI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Mid and CI Investment.

Diversification Opportunities for Hamilton Mid and CI Investment

-0.13

Correlation Coefficient

Hamilton Mid  CI Investment

Good diversification

The 3 months correlation between Hamilton and FIG is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Mid Cap Financials and CI Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Investment Grade and Hamilton Mid 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 Mid Cap Financials are associated (or correlated) with CI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Investment Grade has no effect on the direction of Hamilton Mid i.e., Hamilton Mid and CI Investment go up and down completely randomly.

Pair Corralation between Hamilton Mid and CI Investment

Assuming the 90 days trading horizon Hamilton Mid Cap Financials is expected to under-perform the CI Investment. In addition to that, Hamilton Mid is 3.45 times more volatile than CI Investment Grade. It trades about -0.01 of its total potential returns per unit of risk. CI Investment Grade is currently generating about 0.11 per unit of volatility. If you would invest  933.00  in CI Investment Grade on December 29, 2024 and sell it today you would earn a total of  21.00  from holding CI Investment Grade or generate 2.25% return on investment over 90 days.

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

Hamilton Mid Cap Financials  vs.  CI Investment Grade

Hamilton Mid Cap

Risk-Adjusted Performance

Very Weak

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

CI Investment Grade

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Investment Grade are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, CI Investment 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 Mid and CI Investment

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

The idea behind Hamilton Mid Cap Financials and CI Investment Grade 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.