Correlation Between IShares SPTSX and Hamilton Australian

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

By analyzing existing cross correlation between iShares SPTSX Capped and Hamilton Australian Bank, you can compare the effects of market volatilities on IShares SPTSX and Hamilton Australian 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 IShares SPTSX with a short position of Hamilton Australian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and Hamilton Australian.

Diversification Opportunities for IShares SPTSX and Hamilton Australian

0.73

Correlation Coefficient

IShares SPTSX  Hamilton Australian

Poor diversification

The 3 months correlation between IShares and Hamilton is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped and Hamilton Australian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Australian Bank and IShares SPTSX 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 iShares SPTSX Capped are associated (or correlated) with Hamilton Australian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Australian Bank has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and Hamilton Australian go up and down completely randomly.

Pair Corralation between IShares SPTSX and Hamilton Australian

Assuming the 90 days trading horizon iShares SPTSX Capped is expected to generate 0.54 times more return on investment than Hamilton Australian. However, iShares SPTSX Capped is 1.84 times less risky than Hamilton Australian. It trades about 0.42 of its potential returns per unit of risk. Hamilton Australian Bank is currently generating about 0.13 per unit of risk. If you would invest  5,302  in iShares SPTSX Capped on August 31, 2024 and sell it today you would earn a total of  798.00  from holding iShares SPTSX Capped or generate 15.05% return on investment over 90 days.

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

iShares SPTSX Capped  vs.  Hamilton Australian Bank

iShares SPTSX Capped

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SPTSX Capped are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares SPTSX displayed solid returns over the last few months and may actually be approaching a breakup point.

Hamilton Australian Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Australian Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Hamilton Australian may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with IShares SPTSX and Hamilton Australian

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

The idea behind iShares SPTSX Capped and Hamilton Australian Bank 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.