Correlation Between Hartford Multifactor and ETRACS 2xMonthly
Can any of the company-specific risk be diversified away by investing in both Hartford Multifactor and ETRACS 2xMonthly 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 Multifactor and ETRACS 2xMonthly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hartford Multifactor Developed and ETRACS 2xMonthly Pay, you can compare the effects of market volatilities on Hartford Multifactor and ETRACS 2xMonthly 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 Multifactor with a short position of ETRACS 2xMonthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Multifactor and ETRACS 2xMonthly.
Diversification Opportunities for Hartford Multifactor and ETRACS 2xMonthly
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hartford and ETRACS is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Multifactor Developed and ETRACS 2xMonthly Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS 2xMonthly Pay and Hartford Multifactor 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 Hartford Multifactor Developed are associated (or correlated) with ETRACS 2xMonthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS 2xMonthly Pay has no effect on the direction of Hartford Multifactor i.e., Hartford Multifactor and ETRACS 2xMonthly go up and down completely randomly.
Pair Corralation between Hartford Multifactor and ETRACS 2xMonthly
Given the investment horizon of 90 days Hartford Multifactor Developed is expected to generate 0.43 times more return on investment than ETRACS 2xMonthly. However, Hartford Multifactor Developed is 2.32 times less risky than ETRACS 2xMonthly. It trades about 0.07 of its potential returns per unit of risk. ETRACS 2xMonthly Pay is currently generating about 0.02 per unit of risk. If you would invest 2,340 in Hartford Multifactor Developed on August 30, 2024 and sell it today you would earn a total of 619.00 from holding Hartford Multifactor Developed or generate 26.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hartford Multifactor Developed vs. ETRACS 2xMonthly Pay
Performance |
| Timeline |
| Hartford Multifactor |
| ETRACS 2xMonthly Pay |
Hartford Multifactor and ETRACS 2xMonthly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Multifactor and ETRACS 2xMonthly
The main advantage of trading using opposite Hartford Multifactor and ETRACS 2xMonthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Multifactor position performs unexpectedly, ETRACS 2xMonthly 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 ETRACS 2xMonthly will offset losses from the drop in ETRACS 2xMonthly's long position.| Hartford Multifactor vs. Vanguard International Dividend | Hartford Multifactor vs. Vanguard Global ex US | Hartford Multifactor vs. Vanguard High Dividend | Hartford Multifactor vs. Vanguard Emerging Markets |
| ETRACS 2xMonthly vs. ProShares VIX Mid Term | ETRACS 2xMonthly vs. ProShares VIX Short Term | ETRACS 2xMonthly vs. iPath Series B | ETRACS 2xMonthly vs. ProShares Short Russell2000 |
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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