Correlation Between Dow Jones and Hartford Multi-asset
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Hartford Multi-asset 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 Dow Jones and Hartford Multi-asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Hartford Multi Asset Income, you can compare the effects of market volatilities on Dow Jones and Hartford Multi-asset 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 Dow Jones with a short position of Hartford Multi-asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Hartford Multi-asset.
Diversification Opportunities for Dow Jones and Hartford Multi-asset
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Hartford is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Hartford Multi Asset Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multi Asset and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Hartford Multi-asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Multi Asset has no effect on the direction of Dow Jones i.e., Dow Jones and Hartford Multi-asset go up and down completely randomly.
Pair Corralation between Dow Jones and Hartford Multi-asset
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 2.83 times more return on investment than Hartford Multi-asset. However, Dow Jones is 2.83 times more volatile than Hartford Multi Asset Income. It trades about 0.16 of its potential returns per unit of risk. Hartford Multi Asset Income is currently generating about 0.12 per unit of risk. If you would invest 3,880,733 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 610,332 from holding Dow Jones Industrial or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Hartford Multi Asset Income
Performance |
| Timeline |
Dow Jones and Hartford Multi-asset Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Hartford Multi Asset Income
Pair trading matchups for Hartford Multi-asset
Pair Trading with Dow Jones and Hartford Multi-asset
The main advantage of trading using opposite Dow Jones and Hartford Multi-asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Hartford Multi-asset 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 Hartford Multi-asset will offset losses from the drop in Hartford Multi-asset's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
Check out your portfolio center.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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