Correlation Between Hartford Emerging and Smead International
Can any of the company-specific risk be diversified away by investing in both Hartford Emerging and Smead International 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 Hartford Emerging and Smead International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hartford Emerging and Smead International Value, you can compare the effects of market volatilities on Hartford Emerging and Smead International 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 Hartford Emerging with a short position of Smead International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Emerging and Smead International.
Diversification Opportunities for Hartford Emerging and Smead International
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hartford and Smead is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Emerging and Smead International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smead International Value and Hartford Emerging 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 The Hartford Emerging are associated (or correlated) with Smead International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smead International Value has no effect on the direction of Hartford Emerging i.e., Hartford Emerging and Smead International go up and down completely randomly.
Pair Corralation between Hartford Emerging and Smead International
Assuming the 90 days horizon Hartford Emerging is expected to generate 1.92 times less return on investment than Smead International. But when comparing it to its historical volatility, The Hartford Emerging is 2.54 times less risky than Smead International. It trades about 0.06 of its potential returns per unit of risk. Smead International Value is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,243 in Smead International Value on September 12, 2024 and sell it today you would earn a total of 1,008 from holding Smead International Value or generate 23.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
The Hartford Emerging vs. Smead International Value
Performance |
| Timeline |
| Hartford Emerging |
| Smead International Value |
Hartford Emerging and Smead International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Emerging and Smead International
The main advantage of trading using opposite Hartford Emerging and Smead International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Emerging position performs unexpectedly, Smead International 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 Smead International will offset losses from the drop in Smead International's long position.| Hartford Emerging vs. Fpa Queens Road | Hartford Emerging vs. Ab Small Cap | Hartford Emerging vs. Omni Small Cap Value | Hartford Emerging vs. Boston Partners Small |
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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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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