Correlation Between IA Clarington and Hamilton Canadian

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

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

Diversification Opportunities for IA Clarington and Hamilton Canadian

0.94

Correlation Coefficient

IA Clarington  Hamilton Canadian

Almost no diversification

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

Pair Corralation between IA Clarington and Hamilton Canadian

Assuming the 90 days trading horizon IA Clarington is expected to generate 1.0 times less return on investment than Hamilton Canadian. In addition to that, IA Clarington is 1.86 times more volatile than Hamilton Canadian Financials. It trades about 0.13 of its total potential returns per unit of risk. Hamilton Canadian Financials is currently generating about 0.25 per unit of volatility. 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

IA Clarington Loomis  vs.  Hamilton Canadian Financials

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.

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.

Pair Trading with IA Clarington and Hamilton Canadian

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

The idea behind IA Clarington Loomis and Hamilton Canadian Financials 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.