Correlation Between Dimensional Targeted and Hartford Multifactor

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

By analyzing existing cross correlation between Dimensional Targeted Value and Hartford Multifactor Small, you can compare the effects of market volatilities on Dimensional Targeted 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 Dimensional Targeted with a short position of Hartford Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Targeted and Hartford Multifactor.

Diversification Opportunities for Dimensional Targeted and Hartford Multifactor

0.83

Correlation Coefficient

Dimensional Targeted  Hartford Multifactor

Very poor diversification

The 3 months correlation between Dimensional and Hartford is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Targeted Value and Hartford Multifactor Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor and Dimensional Targeted 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 Dimensional Targeted Value 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 Dimensional Targeted i.e., Dimensional Targeted and Hartford Multifactor go up and down completely randomly.

Pair Corralation between Dimensional Targeted and Hartford Multifactor

Given the investment horizon of 90 days Dimensional Targeted Value is expected to generate 0.98 times more return on investment than Hartford Multifactor. However, Dimensional Targeted Value is 1.02 times less risky than Hartford Multifactor. It trades about 0.1 of its potential returns per unit of risk. Hartford Multifactor Small is currently generating about 0.1 per unit of risk. If you would invest  5,560  in Dimensional Targeted Value on August 30, 2024 and sell it today you would earn a total of  482.00  from holding Dimensional Targeted Value or generate 8.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Dimensional Targeted Value  vs.  Hartford Multifactor Small

Dimensional Targeted

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional Targeted Value are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Dimensional Targeted may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Hartford Multifactor

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Multifactor Small are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Hartford Multifactor may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Dimensional Targeted and Hartford Multifactor

The main advantage of trading using opposite Dimensional Targeted and Hartford Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Targeted 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.

The idea behind Dimensional Targeted Value and Hartford Multifactor 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.