Correlation Between BMO Covered and Hamilton Technology

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

By analyzing existing cross correlation between BMO Covered Call and Hamilton Technology Yield, you can compare the effects of market volatilities on BMO Covered and Hamilton Technology 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 BMO Covered with a short position of Hamilton Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Covered and Hamilton Technology.

Diversification Opportunities for BMO Covered and Hamilton Technology

-0.66

Correlation Coefficient

BMO Covered  Hamilton Technology

Excellent diversification

The 3 months correlation between BMO and Hamilton is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding BMO Covered Call and Hamilton Technology Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Technology Yield and BMO Covered 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 BMO Covered Call are associated (or correlated) with Hamilton Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Technology Yield has no effect on the direction of BMO Covered i.e., BMO Covered and Hamilton Technology go up and down completely randomly.

Pair Corralation between BMO Covered and Hamilton Technology

Assuming the 90 days trading horizon BMO Covered Call is expected to under-perform the Hamilton Technology. But the etf apears to be less risky and, when comparing its historical volatility, BMO Covered Call is 2.25 times less risky than Hamilton Technology. The etf trades about -0.17 of its potential returns per unit of risk. The Hamilton Technology Yield is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,224  in Hamilton Technology Yield on October 12, 2024 and sell it today you would earn a total of  41.00  from holding Hamilton Technology Yield or generate 1.84% return on investment over 90 days.

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

BMO Covered Call  vs.  Hamilton Technology Yield

BMO Covered Call

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hamilton Technology Yield

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Technology Yield are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Hamilton Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BMO Covered and Hamilton Technology

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

The idea behind BMO Covered Call and Hamilton Technology 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.