Correlation Between First Trust and Hartford Multifactor
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Hartford Multifactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Value and Hartford Multifactor Equity, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Hartford Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Hartford Multifactor.
Diversification Opportunities for First Trust and Hartford Multifactor
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Hartford is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Value and Hartford Multifactor Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor and First Trust 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 First Trust Value 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 First Trust i.e., First Trust and Hartford Multifactor go up and down completely randomly.
Pair Corralation between First Trust and Hartford Multifactor
Considering the 90-day investment horizon First Trust is expected to generate 3.37 times less return on investment than Hartford Multifactor. But when comparing it to its historical volatility, First Trust Value is 1.08 times less risky than Hartford Multifactor. It trades about 0.03 of its potential returns per unit of risk. Hartford Multifactor Equity is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,004 in Hartford Multifactor Equity on November 2, 2024 and sell it today you would earn a total of 307.00 from holding Hartford Multifactor Equity or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Value vs. Hartford Multifactor Equity
Performance |
| Timeline |
| First Trust Value |
| Hartford Multifactor |
First Trust and Hartford Multifactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Hartford Multifactor
The main advantage of trading using opposite First Trust and Hartford Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. First Trust Morningstar | First Trust vs. First Trust Rising | First Trust vs. First Trust Capital | First Trust vs. WisdomTree LargeCap Dividend |
| Hartford Multifactor vs. Hartford Multifactor Emerging | Hartford Multifactor vs. Hartford Multifactor Developed | Hartford Multifactor vs. iShares Equity Factor | Hartford Multifactor vs. SPDR MSCI USA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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