Correlation Between Hamilton Enhanced and IA Clarington

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

Diversification Opportunities for Hamilton Enhanced and IA Clarington

0.78

Correlation Coefficient

Hamilton Enhanced  IA Clarington

Poor diversification

The 3 months correlation between Hamilton and IGAF is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Enhanced Covered 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 Enhanced 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 Enhanced Covered 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 Enhanced i.e., Hamilton Enhanced and IA Clarington go up and down completely randomly.

Pair Corralation between Hamilton Enhanced and IA Clarington

Assuming the 90 days trading horizon Hamilton Enhanced Covered is expected to under-perform the IA Clarington. In addition to that, Hamilton Enhanced is 1.26 times more volatile than IA Clarington Loomis. It trades about -0.26 of its total potential returns per unit of risk. IA Clarington Loomis is currently generating about -0.2 per unit of volatility. If you would invest  1,620  in IA Clarington Loomis on December 5, 2024 and sell it today you would lose (59.00) from holding IA Clarington Loomis or give up 3.64% of portfolio value over 90 days.

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

Hamilton Enhanced Covered  vs.  IA Clarington Loomis

Hamilton Enhanced Covered

Risk-Adjusted Performance

Very Weak

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

IA Clarington Loomis

Risk-Adjusted Performance

Very Weak

Over the last 90 days IA Clarington Loomis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IA Clarington 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 Enhanced and IA Clarington

The main advantage of trading using opposite Hamilton Enhanced and IA Clarington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton Enhanced 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 Enhanced Covered 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.