Correlation Between Schwab Fundamental and Hartford Multifactor
Can any of the company-specific risk be diversified away by investing in both Schwab Fundamental and Hartford Multifactor 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 Schwab Fundamental and Hartford Multifactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab Fundamental International and Hartford Multifactor Developed, you can compare the effects of market volatilities on Schwab Fundamental and Hartford Multifactor 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 Schwab Fundamental with a short position of Hartford Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Fundamental and Hartford Multifactor.
Diversification Opportunities for Schwab Fundamental and Hartford Multifactor
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Schwab and Hartford is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Fundamental Internation and Hartford Multifactor Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor and Schwab Fundamental 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 Schwab Fundamental International are associated (or correlated) with Hartford Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Multifactor has no effect on the direction of Schwab Fundamental i.e., Schwab Fundamental and Hartford Multifactor go up and down completely randomly.
Pair Corralation between Schwab Fundamental and Hartford Multifactor
Given the investment horizon of 90 days Schwab Fundamental International is expected to under-perform the Hartford Multifactor. In addition to that, Schwab Fundamental is 1.19 times more volatile than Hartford Multifactor Developed. It trades about -0.01 of its total potential returns per unit of risk. Hartford Multifactor Developed is currently generating about 0.02 per unit of volatility. If you would invest 2,925 in Hartford Multifactor Developed on November 2, 2024 and sell it today you would earn a total of 35.00 from holding Hartford Multifactor Developed or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schwab Fundamental Internation vs. Hartford Multifactor Developed
Performance |
| Timeline |
| Schwab Fundamental |
| Hartford Multifactor |
Schwab Fundamental and Hartford Multifactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Fundamental and Hartford Multifactor
The main advantage of trading using opposite Schwab Fundamental and Hartford Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Fundamental position performs unexpectedly, Hartford Multifactor 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 Multifactor will offset losses from the drop in Hartford Multifactor's long position.| Schwab Fundamental vs. Schwab Fundamental Small | Schwab Fundamental vs. Schwab Fundamental Large | Schwab Fundamental vs. Schwab Fundamental International | Schwab Fundamental vs. Schwab Fundamental Emerging |
| Hartford Multifactor vs. Goldman Sachs ActiveBeta | Hartford Multifactor vs. Hartford Multifactor Equity | Hartford Multifactor vs. iShares Edge MSCI | Hartford Multifactor vs. Hartford Multifactor Emerging |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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