Correlation Between Hartford Multifactor and 6 Meridian
Can any of the company-specific risk be diversified away by investing in both Hartford Multifactor and 6 Meridian 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 6 Meridian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hartford Multifactor Small and 6 Meridian Small, you can compare the effects of market volatilities on Hartford Multifactor and 6 Meridian 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 6 Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Multifactor and 6 Meridian.
Diversification Opportunities for Hartford Multifactor and 6 Meridian
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hartford and SIXS is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Multifactor Small and 6 Meridian Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 6 Meridian Small 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 Small are associated (or correlated) with 6 Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 6 Meridian Small has no effect on the direction of Hartford Multifactor i.e., Hartford Multifactor and 6 Meridian go up and down completely randomly.
Pair Corralation between Hartford Multifactor and 6 Meridian
Given the investment horizon of 90 days Hartford Multifactor Small is expected to generate 1.03 times more return on investment than 6 Meridian. However, Hartford Multifactor is 1.03 times more volatile than 6 Meridian Small. It trades about 0.18 of its potential returns per unit of risk. 6 Meridian Small is currently generating about 0.16 per unit of risk. If you would invest 4,341 in Hartford Multifactor Small on November 2, 2024 and sell it today you would earn a total of 145.00 from holding Hartford Multifactor Small or generate 3.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hartford Multifactor Small vs. 6 Meridian Small
Performance |
| Timeline |
| Hartford Multifactor |
| 6 Meridian Small |
Hartford Multifactor and 6 Meridian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Multifactor and 6 Meridian
The main advantage of trading using opposite Hartford Multifactor and 6 Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Multifactor position performs unexpectedly, 6 Meridian 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 6 Meridian will offset losses from the drop in 6 Meridian's long position.The idea behind Hartford Multifactor Small and 6 Meridian Small pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| 6 Meridian vs. 6 Meridian Mega | 6 Meridian vs. 6 Meridian Low | 6 Meridian vs. ETC 6 Meridian | 6 Meridian vs. Two Roads Shared |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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