Correlation Between IShares Financial and Hartford Multifactor
Can any of the company-specific risk be diversified away by investing in both IShares Financial 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 IShares Financial and Hartford Multifactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Financial Services and Hartford Multifactor Equity, you can compare the effects of market volatilities on IShares Financial 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 IShares Financial with a short position of Hartford Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Financial and Hartford Multifactor.
Diversification Opportunities for IShares Financial and Hartford Multifactor
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Hartford is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding iShares Financial Services and Hartford Multifactor Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor and IShares Financial 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 iShares Financial Services 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 IShares Financial i.e., IShares Financial and Hartford Multifactor go up and down completely randomly.
Pair Corralation between IShares Financial and Hartford Multifactor
Considering the 90-day investment horizon iShares Financial Services is expected to generate 1.68 times more return on investment than Hartford Multifactor. However, IShares Financial is 1.68 times more volatile than Hartford Multifactor Equity. It trades about 0.15 of its potential returns per unit of risk. Hartford Multifactor Equity is currently generating about 0.08 per unit of risk. If you would invest 7,057 in iShares Financial Services on November 2, 2024 and sell it today you would earn a total of 1,353 from holding iShares Financial Services or generate 19.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Financial Services vs. Hartford Multifactor Equity
Performance |
| Timeline |
| iShares Financial |
| Hartford Multifactor |
IShares Financial and Hartford Multifactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Financial and Hartford Multifactor
The main advantage of trading using opposite IShares Financial and Hartford Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Financial 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.| IShares Financial vs. iShares Financials ETF | IShares Financial vs. iShares Consumer Discretionary | IShares Financial vs. iShares Industrials ETF | IShares Financial vs. iShares Consumer Staples |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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