Correlation Between IShares Core and Hartford Multifactor

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

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

Diversification Opportunities for IShares Core and Hartford Multifactor

0.97

Correlation Coefficient

IShares Core  Hartford Multifactor

Almost no diversification

The 3 months correlation between IShares and Hartford is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Dividend and Hartford Multifactor Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor and IShares Core 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 iShares Core Dividend 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 IShares Core i.e., IShares Core and Hartford Multifactor go up and down completely randomly.

Pair Corralation between IShares Core and Hartford Multifactor

Given the investment horizon of 90 days IShares Core is expected to generate 1.25 times less return on investment than Hartford Multifactor. But when comparing it to its historical volatility, iShares Core Dividend is 1.16 times less risky than Hartford Multifactor. It trades about 0.16 of its potential returns per unit of risk. Hartford Multifactor Equity is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5,033  in Hartford Multifactor Equity on September 2, 2024 and sell it today you would earn a total of  396.00  from holding Hartford Multifactor Equity or generate 7.87% return on investment over 90 days.

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

iShares Core Dividend  vs.  Hartford Multifactor Equity

iShares Core Dividend

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Dividend are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Hartford Multifactor

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Multifactor Equity are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Hartford Multifactor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares Core and Hartford Multifactor

The main advantage of trading using opposite IShares Core and Hartford Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 iShares Core Dividend and Hartford Multifactor Equity 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.