Correlation Between Invesco FTSE and Hartford Multifactor
Can any of the company-specific risk be diversified away by investing in both Invesco FTSE 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 Invesco FTSE and Hartford Multifactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco FTSE RAFI and Hartford Multifactor Developed, you can compare the effects of market volatilities on Invesco FTSE 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 Invesco FTSE with a short position of Hartford Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco FTSE and Hartford Multifactor.
Diversification Opportunities for Invesco FTSE and Hartford Multifactor
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Hartford is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Invesco FTSE RAFI and Hartford Multifactor Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor and Invesco FTSE 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 Invesco FTSE RAFI 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 Invesco FTSE i.e., Invesco FTSE and Hartford Multifactor go up and down completely randomly.
Pair Corralation between Invesco FTSE and Hartford Multifactor
Considering the 90-day investment horizon Invesco FTSE is expected to generate 1.4 times less return on investment than Hartford Multifactor. In addition to that, Invesco FTSE 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 |
Invesco FTSE RAFI vs. Hartford Multifactor Developed
Performance |
| Timeline |
| Invesco FTSE RAFI |
| Hartford Multifactor |
Invesco FTSE and Hartford Multifactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco FTSE and Hartford Multifactor
The main advantage of trading using opposite Invesco FTSE and Hartford Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco FTSE 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.| Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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