Correlation Between Hamilton Enhanced and BMO Floating

Can any of the company-specific risk be diversified away by investing in both Hamilton Enhanced and BMO Floating 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 BMO Floating 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 BMO Floating Rate, you can compare the effects of market volatilities on Hamilton Enhanced and BMO Floating 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 BMO Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Enhanced and BMO Floating.

Diversification Opportunities for Hamilton Enhanced and BMO Floating

0.98

Correlation Coefficient

Hamilton Enhanced  BMO Floating

Almost no diversification

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

Pair Corralation between Hamilton Enhanced and BMO Floating

Assuming the 90 days trading horizon Hamilton Enhanced Covered is expected to generate 2.61 times more return on investment than BMO Floating. However, Hamilton Enhanced is 2.61 times more volatile than BMO Floating Rate. It trades about 0.25 of its potential returns per unit of risk. BMO Floating Rate is currently generating about 0.22 per unit of risk. If you would invest  1,197  in Hamilton Enhanced Covered on May 6, 2025 and sell it today you would earn a total of  148.00  from holding Hamilton Enhanced Covered or generate 12.36% return on investment over 90 days.

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

Hamilton Enhanced Covered  vs.  BMO Floating Rate

Hamilton Enhanced Covered

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Enhanced Covered are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Hamilton Enhanced may actually be approaching a critical reversion point that can send shares even higher in September 2025.

BMO Floating Rate

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Floating Rate are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, BMO Floating 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 BMO Floating

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

The idea behind Hamilton Enhanced Covered and BMO Floating Rate 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.