Correlation Between Hamilton Enhanced and BetaPro Equal

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

By analyzing existing cross correlation between Hamilton Enhanced Canadian and BetaPro Equal Weight, you can compare the effects of market volatilities on Hamilton Enhanced and BetaPro Equal 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 BetaPro Equal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Enhanced and BetaPro Equal.

Diversification Opportunities for Hamilton Enhanced and BetaPro Equal

0.98

Correlation Coefficient

Hamilton Enhanced  BetaPro Equal

Almost no diversification

The 3 months correlation between Hamilton and BetaPro is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Enhanced Canadian and BetaPro Equal Weight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Equal Weight 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 Canadian are associated (or correlated) with BetaPro Equal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Equal Weight has no effect on the direction of Hamilton Enhanced i.e., Hamilton Enhanced and BetaPro Equal go up and down completely randomly.

Pair Corralation between Hamilton Enhanced and BetaPro Equal

Assuming the 90 days trading horizon Hamilton Enhanced is expected to generate 1.91 times less return on investment than BetaPro Equal. But when comparing it to its historical volatility, Hamilton Enhanced Canadian is 3.34 times less risky than BetaPro Equal. It trades about 0.66 of its potential returns per unit of risk. BetaPro Equal Weight is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  3,187  in BetaPro Equal Weight on April 15, 2025 and sell it today you would earn a total of  354.00  from holding BetaPro Equal Weight or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.24%
Values	Daily Returns

Hamilton Enhanced Canadian  vs.  BetaPro Equal Weight

Hamilton Enhanced

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Enhanced Canadian are ranked lower than 52 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Hamilton Enhanced displayed solid returns over the last few months and may actually be approaching a breakup point.

BetaPro Equal Weight

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro Equal Weight are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BetaPro Equal displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hamilton Enhanced and BetaPro Equal

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

The idea behind Hamilton Enhanced Canadian and BetaPro Equal Weight 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.