Correlation Between Avantis Emerging and The Hartford

Can any of the company-specific risk be diversified away by investing in both Avantis Emerging and The Hartford 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 Avantis Emerging and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avantis Emerging Markets and The Hartford Emerging, you can compare the effects of market volatilities on Avantis Emerging and The Hartford 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 Avantis Emerging with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Emerging and The Hartford.

Diversification Opportunities for Avantis Emerging and The Hartford

0.49

Correlation Coefficient

Avantis Emerging  The Hartford

Very weak diversification

The 3 months correlation between Avantis and THE is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Emerging Markets and The Hartford Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Emerging and Avantis 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 Avantis Emerging Markets are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Emerging has no effect on the direction of Avantis Emerging i.e., Avantis Emerging and The Hartford go up and down completely randomly.

Pair Corralation between Avantis Emerging and The Hartford

Assuming the 90 days horizon Avantis Emerging Markets is expected to generate 1.77 times more return on investment than The Hartford. However, Avantis Emerging is 1.77 times more volatile than The Hartford Emerging. It trades about -0.09 of its potential returns per unit of risk. The Hartford Emerging is currently generating about -0.18 per unit of risk. If you would invest  1,248  in Avantis Emerging Markets on September 5, 2024 and sell it today you would lose (22.00) from holding Avantis Emerging Markets or give up 1.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Avantis Emerging Markets  vs.  The Hartford Emerging

Avantis Emerging Markets

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avantis Emerging Markets are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Avantis Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hartford Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, The Hartford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Avantis Emerging and The Hartford

The main advantage of trading using opposite Avantis Emerging and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Emerging position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.

The idea behind Avantis Emerging Markets and The Hartford Emerging 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.